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. gary61b says:

    ES, a drop below 2876.5, looking for t1 to complete at 2863.25 also a drop to 2854 would fall inside Tonys pivot range of 2858, as long as 2899.5 is not breached first.

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  2. lunker1 says:

    2884 2910 bounce 26
    2869 2890 bounce 21
    2862 2889 bounce 27

    The upper end of pivot range is 2891. If 2862 holds a move above 2891 would seem to signal a bottom of sorts

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    • mcgcapital says:

      Nice bounces to sell into.. looks like money made trading both sides and not committing to big breaks either way. But we’ve just fully retraced a rally leg for the first time since March so bears definitely in control now

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  3. TommyB says:

    Good evening Tony,
    Getting back into the game and I have several questions for you IF you choose to answer.
    Since we are in the beginning stage of a long term bullish S&P super cycle and we are approaching the end of Wave 1, my question for you is do you trade Wave 2’s and Wave 4’s OR do you step aside and wait for Wave 3 and Wave 5 to resume?
    Thanks in advance Tony and thank you so much for your steadfast analysis!

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  4. fionamargaret says:


    Thanks Chris Kimble

    https://raymondjames.bluematrix.com/sellside/EmailDocViewer?encrypt=7833490e-4869-47fd-961b-906271698fc8&mime=pdf&co=RaymondJames&id=Jeffrey.Saut@RaymondJames.com&source=mail
    Thanks Raymond James

    Thanks and love to Tony….and everyone xx

    Sometimes the less sophisticated ensemble turns out the most endearing performance..takes me back some…

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  5. Page says:

    Significant size SPX bounce is in cards.

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  6. Bud Fox says:

    ref. RON PAUL….h eis talking recession, or something greater, in the near future.
    But he is veryy reluctant to be anymore specific on the start of a recesion or something greater.
    But he says the pay back is going to be bad for the SP.
    https://www.cnbc.com/2018/10/05/ron-paul-us-barreling-towards-a-recession-and-theres-no-escape.html

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  7. torehund says:

    https://www.iflscience.com/editors-blog/nobel-prize-for-economics-goes-to-climate-change-and-growth-models/

    …next year they may have to mow Snow in July. Perfect hit, total absence of sun-spots.

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  8. Next 10 days of recovery. either double top or slightly higher 2948 area. A recovery here suggests a more damaging crash right after. if we meander lower from here that scenario is negated. The faster the rebound the more likely unresolved deterioration of market fundamentals. Yields fast approaching major target 3.32 on 10 year. Dollar very likely to hold above 95. I suspect most here would view a recovery from this point forward as positive. If MY scenario plays out I will be placing big bets in 10 days time.

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    • OIL lowered on Trumps magnanimous waiver on Iran Oil Sanctions. But give him one more day and he will reverse this back. Iran Full USA sanctions will place OIL above 100 dollars based on fundamentals. if you think external actions by trump isn’t being felt, watch the IRAN SANCTION saga.

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  9. micky says:

    Since hitting resistance Ftse shorts been doing very well,time to think about taking most off . There is a weekly 1st support not to far away .

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