Weekend update

REVIEW

Wild week! The SPX started the week at 2914. After a gap up opening Monday, an inside day Tuesday, and another gap up opening on Wednesday, the SPX hit 2940. One point shy of the all-time high. After Wednesday morning’s high it was all downhill from there. By Friday the SPX was trading at 2869. For the week the SPX/DOW lost 0.5%, and the NDX/NAZ lost 3.1%. Economic reports for the week were mostly positive. On the downtick: ISM, monthly payrolls, plus the trade deficit widened. On the uptick: construction spending, auto sales, the ADP, ISM services, factory orders, consumer credit, plus jobless claims and unemployment declined. Next week’s reports will be highlighted by the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend weakening

For the past few weeks we have been noting that the four major indices, (SPX, DOW, NDX, NAZ) not only appear to be in their last uptrend of this bull market. But are also getting close to completing, or in some cases may have completed, that uptrend. We noted last weekend that the NDX/NAZ were already in confirmed downtrends. But the SPX/DOW appeared to have more work to do on the upside before entering their downtrends.

This week the DOW made all-time new highs on two consecutive days, falling less than 50 points short of hitting 27,000 for the first time. The SPX rallied to within one point of its 2941 all-time high before retreating. Yet the TRAN and R2K confirmed downtrends this week. As noted we scale into positions during potential bear market bottoms, and scale out during potential bull market tops. But do your own homework and make your own investment decisions.

MEDIUM TERM: uptrend weakening

We had marked last week that Minor 3 was done at SPX 2941. When the SPX rallied back to 2940, and the DOW was making new highs, for one day we thought Minor 3 might go higher. Then the SPX reversed, along with the rest of the market, and the SPX 2941 level still stands as the Minor 3 high. Minor wave 4, within this Intermediate wave v uptrend, resumed. On Friday the SPX traded down to 2869, for a 72 point drop from the all-time high. We have been projecting Minor wave 4 would drop 60-100 points.

At this point everything seems to fit quite nicely. The SPX displayed daily RSI/MACD divergences at the 2941 Minor wave 3 high. The decline since then has been an a-b-c. With the A wave 38 points and the C wave 71 points thus far. Nearly a 2:1 ratio. Time to start looking for a Minor wave 4 low. Medium term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots.

SHORT TERM

Tricky market lately with all the cross currents. Nothing new for this bull market though. As noted earlier the Minor wave 4 decline displays a C wave nearly double the size of the A wave. Usually a good relationship in a zigzag. The decline has been 72 points, and is within our 60-100 point range. At Friday’s low the daily RSI hit oversold for the first time since Minor wave 2. And Friday’s low was within just a few points of the previous 4th wave at SPX 2864.

Overall this activity looks good for a potential Minor wave 4 low, especially when you add the positive divergence on the hourly chart at the low. Placed a tentative green label at that 2869 low. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower and lost 2.2%.

European markets were all lower and lost 2.0%.

The DJ World index lost 1.9%, and the NYSE lost 0.7%.

COMMODITIES

Bonds continue to downtrend and lost 1.0%.

Crude remains in an uptrend and gained 1.5%.

Gold is still in a sluggish uptrend and gained 0.8%.

The USD is also in an uptrend and gained 0.7%.

NEXT WEEK

Wednesday: PPI and wholesale inventories. Thursday: weekly jobless claims, the CPI, and the Federal budget. Friday: export/import prices and consumer sentiment. Best to your week!

CHARTS: https://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
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737 Responses to Weekend update

  1. phil1247 says:

    gary
    es 63 target coming up
    get ready to exit if we dont blast down thru

    Like

  2. Page says:

    Bounce will start this afternoon for a day or two then final flush to below 2800 (2780sh).

    Like

  3. stan911 says:

    Spx gap at 2772 from ways back not saying it’s going there but ya never know

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  4. lml25 says:

    GDX weekly +div still in play.Looking back to 2013,there was a lot of back and forth with THAT +div,but ultimately,a 30% up move from the low.Not much has taken place on this one yet.
    SPX hanging on. A 300 point dow drop today would put the bread in the toaster imho.GL all.

    Like

  5. fotis2 says:

    A day late,2868 DT hit, Bullflag hanging by a thread
    October 5, 2018 at 3:45 am

    Looks like ES will test 2868 today DT on small time frames any lower Bullfag invalidates will have to review
    https://invst.ly/8ski2

    https://invst.ly/8t9u-

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  6. emuntrader says:

    Thinking Minor Wave 4 is in.

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  7. Theodore Lerts says:

    I mentioned this around Friday’s close and I’ll say it again. For US indices I expect more blood this week before this correction resolves. And i’m not talking about a paper cut….Looking for end of week/Friday’s session to considering entering long positions. Best of luck.

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  8. fotis2 says:

    $USD GOLD No Change
    fotis2 says:
    August 6, 2018 at 2:24 pm

    https://invst.ly/878lq
    https://invst.ly/878mc

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