Weekend update

REVIEW

The week started off at SPX 2723. It was a strong week to the upside until the FED announced on Thursday a rate increase is likely next month, and three more in 2019. The market gapped up on Monday, continued higher on Tuesday, then gapped up again post mid-term elections on Wednesday. At Wednesday’s high the SPX hit 2815. After a small pullback and another rally to SPX 2815 the market began to pullback. A gap down opening on Friday took the SPX to 2764, then the market bounced to end the week at 2781. For the week the SPX/DOW gained 2.45%, and the NDX/NAZ gained 0.90%. Economic reports for the week were mixed. On the downtick: ISM services, consumer credit and consumer sentiment. On the uptick: the PPI, wholesale inventories and weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, retail sales and the CPI. Best to your week!

LONG TERM: downtrend probable

The market continues to generally track as expected. After a five wave bull market, with a subdividing third wave, from SPX 1810 to SPX 2941, the market reversed and appears to be in a potentially short-lived bear market. The first decline of this bear market bottomed in October at SPX 2604. Currently it looks like the market has been in a counter-trend rally, and has already retraced 61.8% of that entire initial decline.

Since we are expecting a three wave bear market we are labeling the first decline as Intermediate wave A, and the current rally as Intermediate wave B. Intermediate wave C should naturally follow once this rally/uptrend concludes. During the C we are expecting the SPX to break through the recent lows with a maximum downside target around SPX 2400 (green line). After that the next bull market should begin. Keep in mind we are in a Secular generational bull market, and we are not expecting it to top until the early 2030’s.

MEDIUM TERM: uptrend probable

We are currently working with a couple of variables as is normally the case when one trend appears done and a new one underway. We refer to the downtrend from SPX 2941-2604 as probably being completed at that low, and a counter-trend uptrend now underway. The second variable is the degree of the waves. Are they Minor or Intermediate? What occurs in the next couple of weeks/months should determine that. But we will go with Intermediate scenario for now since the initial decline was quite steep.

From the SPX 2941/2940 bull market high we labeled the first decline in three Minor waves: 2711-2817-2604, as Int. A. Off that low it appears that Minor wave A, of Int. B, has completed at SPX 2815, which we labeled with a tentative green label. If this is correct we now would expect a decline to around SPX 2700 for Minor wave B. When that concludes, a Minor C rally should take the market back to SPX 2815, or a bit higher, to end the Intermediate wave B uptrend. After that an Intermediate wave C downtrend should take over.

SHORT TERM

While the Intermediate wave A downtrend was quite volatile, creating many waves. This uptrend has been a bit more subdued. Off the SPX 2604 low we tracked 5 waves up to 2737, a pullback to 2709, then a rally to 2757. Then after a decline to SPX 2700 the market streaked higher to SPX 2815. The entire movement can be considered a zigzag: 2757-2700-2815. Next a pullback to around SPX 2700 would fit as it matches the B wave of the zigzag.

Short term support is at the 2780 and 2731 pivots, with resistance at the 2798 and 2835 pivots. Short term momentum ended the week heading toward neutral. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week for a net 0.8% loss.

European markets were all higher for a 1.3% gain.

The DJ World index gained 0.8%, and the NYSE gained 1.8%.

COMMODITIES

Bonds are in a downtrend but gained 0.1%.

Crude remains in a downtrend and lost 4.7%.

Gold appears to be heading into a downtrend and lost 2.0%.

The USD is still in an uptrend and gained 0.2%.

NEXT WEEK

Monday: Veterans Day. Tuesday: Budget deficit. Wednesday: the CPI. Thursday: jobless claims, retail sales, business inventories, export/import prices, the NY/Philly FED. Friday: industrial production, capacity utilization, and options expiration.

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

About tony caldaro

Investor
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630 Responses to Weekend update

  1. torehund says:

    ..if you werent long nat gas or short this was a bad day, shoot..

  2. Noah J says:

    Tomorrow will be very ugly. Look for potentially a small small rally in the morning. Then the real plunge. But buy the bottom in the afternoon.

  3. mcgcapital says:

    ‘This is the low.’ ‘No this ones the low.’ ‘This one is the low. It’s a CIT moon day.’ ‘Just gone long. It’s the low, we have seasonality behind us and markets can’t go down this time of year. Plus those naughty put holders can’t possibly make money.’

    It acts like a bear market, therefore it is a bear market until proven otherwise. Strong opinions, weakly held is the way. You’re nuts if you keep buying this and trying to hold for 100+ points on the upside. Why would you when you can just take profits every time you’re showing a profit of 1-2%. Adds up to way more than 100 points per week in this environment with less stress. If you’re going to position trade, it’s got to be on the short side but who knows how long it takes to break. Would rather just keep banking profits and fading moves.

    • aahmichael says:

      Actually, the new moon was on 10/7 (the dead high for the DCB,) but the resident moonies here are major league biased to the long side, so they ignored it.

    • phil1247 says:

      agree
      still dont see anything bullish yet
      lower lows lower highs below the 18dsma

    • aahmichael says:

      100+ points decline in a week is perfect for position traders to just go short and then do nothing. The decline in October lasted 19 trading days, and that was 300+ points. Less is definitely more in trending moves.

    • allen kimble says:

      Yeah I remember late October many said the same thing and it actually bottomed. The bottom is very close here maybe one more day or until Friday and it will be over. Everything is pointing up until year end my good sir.

      • aahmichael says:

        What’s pointing up? I know of nothing, other than the tendency for the market to rally from mid-Nov through mid-Dec.

        • allen kimble says:

          Yes, That’s what I’m referring to. Sadly however after todays close I think a retest of the 2600 low is coming by Thanksgiving. This year will the first one to NOT have a rally into t year end, if this happens. One for the records.

      • mcgcapital says:

        My point is, in terms of how both the longer term charts look and how price is behaving everyday the bears are in control. We may or may not get another sizeable counter rally soon, and TC seems to think we will and so far the count has worked well on this correction/bear market. But in terms of trading actions, you have three sensible possible choices. And by sensible I mean risk controlled using stops rather than necessarily being right about the market direction.

        1. Keep buying the dips with stops, then each time it bounces up hope that the last dip was the last one, and we’re then in a rally for +100 points.
        2. Keep selling the rips with stops, each time it falls hoping that it’s the one that gives way which is what the longer term charts suggest is coming eventually.
        3. Keep both buying the dips and selling the rips with stops, taking profits when you can. Not easy to call every turn, in fact it’s almost impossible at the moment as a lot of the moves look random. But do something sensible and you can get 30+ points every time you hit on to one, and the moves are coming thick and fast so multiple chances a day.

        1 looks the least attractive as you’re hoping to hit a winner, but the frequency isn’t very high… like in October it was the same on the way down, eventually we did get the rally off 2603 but it would have been easier banking the 50+ points that were coming on counter moves almost daily and then going in fresh again. 2 looks sub optimal to me as there are so many countertrend moves, which adds to the stress if you short and hold, but probably gets rewarded if the charts play out. 3 is undoubtedly the best option and least stressful

  4. H D says:

    Fellas, the good news is it’s Wednesday. Tony will give us all an update. I suggest reading it. He’s pretty good. It’s above the comments.

    • H D says:

      “Next a pullback to around SPX 2700 would fit” Little 75+ handle trade he noted in the last update….

  5. Page says:

    Market just trapped more longs, now it is going to make them run for hill again. 😀

  6. stcoleridge says:

    Noah J knocking it out of the park I see. Oh wait…

  7. allen kimble says:

    It’s CRAZY to think the entire US economy and possibly the world hangs on to a simple gap fill. Kudos who went long on this.

    BTW F_cking market makers. Those crooks. Again kudos to those who bought at that fill

    • purplember says:

      i went long but that doesn’t mean it was the right decision yet

      • allen kimble says:

        Good job..Well it’s such an easy trader for you. You now know your reference point for your stop loss. Below today’s low. If that gives then it’s going to the lows of Oct. I’m not convinced myself. It needs to close green for starters.

        Cheers,

        • aahmichael says:

          You don’t have to wait for today’s lows to be taken out. Anything below 2706.40 is an overlap, which eliminates any possibility that the rally from 2685.75 was an impulse wave.

      • Purpl…you got in around around the high. Had you been a DH disciple you would never have taken that trade as your entry into the long, was a 50% short!!!!!!!!!!!!!!!!!

        • kvilia says:

          asa, generally speaking you are right, however. Sometimes I take a stab at a daily target on the extreme tick and put a tight stop. In the worst case scenario I lose a couple of hundred. Today this made me 3K, almost all I somehow lost yesterday catching a falling CL 😦
          But rules are rules, agree.

      • BTW see my 2 time stamped posts below…

        asaraniti (@asaraniti) says:
        November 14, 2018 at 1:56 pm
        kvilia…that’s what I thought. I took a large long position in SSO with a mental stop when the tick was around (-)450, safe entry?. The volatility was so volatile, I didn’t want to take the time to set the parameters. I sold for $$$ when I didn’t like what I was seeing.

        I went against my rules, I should have waited until/if /ES tests the 50% short at 2719 trades. I will go in big at the corresponding 61.8% SHORT, 2730, is breached. Not playing the rest of the day. Don’t want to chase this large counter trend rally

    • Valerie wapiti says:

      Sometimes life is less complicated than one wants to make it out to be. GF is its own creation.
      ~V~

      • allen kimble says:

        Valerie-Patience was rewarded here for you. I’m happy for you. Given that it is OPEX this week, I’d be shocked if they pay the put holders. Shocked! Meaning a strong rally is due by Friday.

        • dad1 says:

          I think the volatility today has been the big players selling longer dated puts and squaring out this month’s options. They may lose some on this month but no cash loss. The retail players that sold puts will hurt but they can’t move the market.

    • lunker1 says:

      That’s a crazy thought
      It doesn’t hang on it

  8. tommyboys says:

    DGAZ anyone…3X short NG!

  9. quickrick38 says:

    Looks like one last shot to get in (long) before it moves up…small wave 2

  10. valunvstr says:

    🤔 I guess this gap falls into the 90% that do close!

  11. kvilia says:

    Extension shorts broken, and if Tony is right – it is 130 ES points on the table.

    • kvilia…that’s what I thought. I took a large long position in SSO with a mental stop when the tick was around (-)450, safe entry?. The volatility was so volatile, I didn’t want to take the time to set the parameters. I sold for $$$ when I didn’t like what I was seeing.

      I went against my rules, I should have waited until/if /ES tests the 50% short at 2719 trades. I will go in big at the corresponding 61.8% SHORT, 2730, is breached. Not playing the rest of the day. Don’t want to chase this large counter trend rally.

  12. gary61b says:

    ES will most likely break 2685 just like at 2816.. so price will return to these levels to continue the move. so 2685 then look for a bounce may only be a relief for oversold level then look for Tonys pivot for a +D.

  13. Edward Disney says:

    Bought tqqq at average of 48.57.

  14. retiree247 says:

    got long here at the 2700 mark. dec 21 270 calls. lets see how it goes.

  15. scottycj1 says:

    Phil
    We hit 2698.25 Your short now according to your method.

  16. fotis2 says:

    Gold retest Bullflag+HWB we may have something here folks TARGETS 1270S
    https://invst.ly/97kgz

  17. Page says:

    What the heck is going on with NATGAS? looks like UGAZ may hit one of these targets 350-500-700 soon. Gas is going to be extremely expensive this winter. Ridiculous.

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