Weekend update

REVIEW

The week started at SPX 2767. After a lower open on Monday and a trade down to SPX 2749. The market gapped up on Tuesday, and then hit SPX 2817 midday Wednesday. A gap down opening on Thursday took the SPX down to 2755, where it was trading on Monday. Then a gap up opening on Friday rallied the SPX to 2798 early morning, which was sold off for the rest of the day. For the week the SPX/DOW gained 0.20%, and the NDX/NAZ lost 0.65%. Economic reports for the week were mostly positive. On the downtick: housing starts, building permits, existing home sales, and the Philly FED. On the uptick: leading indicators, the NAHB, industrial production, retail sales, the NY FED, business inventories, plus jobless claims and the federal budget improved. Next week’s reports will be highlighted by the beige book and Q3 GDP. Best to your week!

LONG TERM: downtrend probably underway

Despite a volatile week not much has changed from last weekend’s report. The market traded above last week’s SPX 2711 low, and well below the SPX 2941 all-time high. The range for the week was SPX: 2749-2817. And the SPX gained 1 point for the week.

The SPX weekly chart displays the Major wave 1 bull market count from February 2016 to October 2018. Notice the five wave rise from the Primary II bear market low at SPX 1810, to the Major wave 1 high at SPX 2941. Five Intermediate waves, with five Minor waves creating a subdividing Intermediate wave iii. Intermediate ii was an irregular zigzag, and Intermediate iv was a flat. Minor 2 was complex and Minor 4 was simple. Alternation on every level. Same can be said for the DOW, NDX and NAZ chart patterns. They all mimicked each other, while at times not completely in sync.

MEDIUM TERM: downtrend

While the last uptrend left a lot to be desired as for impulsivity. It was still tracked as Intermediate wave v, and expected to be the last uptrend of the bull market. We had noted months ago. If the uptrend surged it could pass SPX 3000 easily. If the uptrend struggled and took lots of time it would probably make only marginal new highs. The uptrend took six months, and exceeded the previous all-time high by only 2.4%. The DOW only exceeded its high by 1.2%.

Thus far the market has dropped from SPX 2941 to SPX 2711. We had thought that could be an important low, and so far it is holding as such. We labeled that low Minute wave A in dark green on the charts. The rally that followed has thus far risen to SPX 2817 for nearly a 50% retracement. We have labeled that with a tentative light green Minute B. So far the decline is moving along generally as expected.

SHORT TERM

With Minute A SPX 2941-2711 (230 points), and Minute B reaching SPX 2817 (106 points), we would now expect Minute C to decline either 0.618 Minute A (2675), or 1.0 Minute A (2587). There are pivots at 2656, 2632 and 2594. Once the market does hit one of those lows it should end this Minor wave A downtrend. Then we would expect a Minor B uptrend retracing 50% to 61.8% of the entire decline. After that we probably won’t be seeing those levels again for some time as the bear market begins to make itself more widely known. If things really get carried away. Which is possible considering the multiples. The FED will be forced to intervene: MM4ME.

Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week just above oversold. Best to your trading! It’s a day traders market.

FOREIGN MARKETS

Asian markets were mostly lower for the week for a net loss of 0.7%.

European markets were mixed and gained 0.3%.

The DJ World index lost 0.1%, and the NYSE gained 0.1%.

COMMODITIES

Bonds continue to downtrend and lost 0.2% on the week.

Crude appears to be in a downtrend and lost 3.7% on the week.

Gold remains in an uptrend and gained 0.6%.

The USD is also in an uptrend and gained 0.8%.

NEXT WEEK

Wednesday: new homes sales and the Beige book. Thursday: weekly jobless claims, durable goods, and pending home sales. Friday: Q3 GDP and consumer sentiment.

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

 

About tony caldaro

Investor
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625 Responses to Weekend update

  1. Page says:

    Tomorrow morning will be the capitulation time then afternoon will be the start of a long lasting explosive rally. Get ready. 😀

    Like

  2. stan911 says:

    Gap at 2754 maybe tomorrow we hit

    Like

  3. A few years ago, StockCharts added a new tool to their annotate workbench.
    The “parabolic” tool.
    Seems most chart users prefer the “log” scale (versus the arithmetic scale), so, the parabola tool doesn’t provide a lot of new data, Except the parabola tool on arithmetic scale presents ii in a more dramatic fashion. As in “Holy Jeez, how did we get up here?

    For example, we all know that the three main rallies in the SPX of the past 35 years were big, but did they look this big?

    Or, or current nearly 10 year-old rally, do you think about the “nose-bleed” acceleration very often?

    Just wonderin…

    GLTA

    Like

    • tommyboys says:

      Yes that “parabolic” tool distorts for effect. Makes those charts look extra scary.

      Like

    • Mark Smith says:

      On an arithmetic scale chart, the higher waves go, the more they will dwarf prior ones in terms of chart-paper. And yet, they could even be much smaller in percentage terms. Ex: $1 to $3 is a triple, but $1000 to $2000 is only a double… It’s folly to use arithmetic scaling, unless the looking at the short-term. Weird, however, is the occasional long-term chart that adheres to EW size suggestions like A=C. I have seen it…

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  4. phil1247 says:

    last one

    if es is going down it has no business being above 15 any more

    good luck and see ya tomorrow !

    thanks Tony!

    Like

  5. stan911 says:

    Spx gap at 2670

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  6. stcoleridge says:

    Lower lows today in the COMP, RUT, SOX and DJT.

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  7. Jack kendo says:

    SPX 2691.91 10/24 lod, vs 2691.43 10/23
    5th wave truncated, opposite to the top of 2940 vs 2941 truncation.
    meaning SPX bottomed. good buy here.

    cheers!

    Like

  8. This market isn’t looking for a bottom.
    It’s just looking for places to let people out.

    Like

    • aahmichael says:

      If the market takes out yesterday’s low today, then it will be the first time in 9 years that a reversal like what occurred yesterday was erased the next day. Action like this only occurs in bear markets.

      Like

      • Jack kendo says:

        unless SPX down another 2%+ from here.
        The fact is, 8.6% for the initial decline is not enough for the start of a bear market, Only a mild correction. it’s the smallest correction in 9 years.

        it’s even smaller than the so called Int iv 11.8% initial decline.
        No matter you are calling it P5 topped , or Major 2 correction, certainly not the size of decline you are looking for.
        I see either P5 or Major 1 topped are not proper degree.

        cheers!

        Like

        • aahmichael says:

          Every 10% decline starts out as a 5% decline
          Every 20% decline starts out as a 10% decline
          Every 35% decline starts out as a 20% decline
          Every 50% decline starts out as a 35% decline

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          • Jack kendo says:

            that’s a wishful thinking, only in theory.
            fact is not like that, none of any 10%+ corrections in last 9 years, and not even during 2007 or 2000 top. the initial size of declines are much larger than this mild 8.6%.

            cheers!

            Like

          • aahmichael says:

            You’re assuming that the initial leg down is done. Of course, you’ve been assuming that it was done at much higher levels (and smaller percentage declines) as well.

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          • Jack kendo says:

            I profit from the largest fastest decline into 2710 (when I called 3 of 3 plunge) while you were nowhere.
            I was 1% earlier calling the bottom, not a big deal, a matter of size of one day move.

            So many time, when you start to become active on the blog, market close to bottom, this Feb was an example. It works every time.

            cheers!

            Like

      • stcoleridge says:

        Agree with that statement and a bear market is exactly what OEW has us in already. Heard a lot of comparisons lately to Oct 2014 with its monstrous mid month reversal. That narrative took a bit of a hit today to say the least. Also some might remember that the B wave that wasn’t back then caused the most tantrumesque behavior this blog has seen, which is saying something.

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      • floyd drummer says:

        aahm,

        interesting comment, ….haven’t traded a bear market. …any relevant comments/observations in trading bear markets (…with elliott wave in mind)?

        Like

  9. Page says:

    Tony’s pivots at 2656, 2632 and 2594, pick one, it is coming, most probably tomorrow then go long from there. 😀

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  10. travis01 says:

    The lotto ticket was sold in my town… not mine so back to work😉

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