Weekend update

REVIEW

Nastiest week of the bear market by far. The selling felt like it was on cruise control. The week started at SPX 2600. After a gap down opening on Monday the SPX made a new downtrend low at 2531. A gap up opening on Tuesday ended with a lower downtrend low at SPX 2529. Wednesday, FOMC day, had a steady rise to SPX 2585 just after the 25bps rate increase was announced. Then for the next hour, including a half-hour pressor with FED chairman Powell, the SPX dropped 100 points to a new downtrend low at 2489. Thursday’s gap down opening added to the selling, and another new downtrend low at SPX 2441. Friday had a quiet open, rallied some on NY FED Williams CNBC interview, then dropped 100 points to a new downtrend low at SPX 2409. New downtrend lows all five days. For the week the SPX/DOW lost 7.0%, and the NDX/NAZ lost 8.35%. Economic reports for the week were mostly positive. On the downtick: the NY/Philly FED, NAHB, plus weekly jobless claims rose. On the uptick: housing starts, building permits, existing home sales, leading indicators, durable goods, personal income/spending, consumer sentiment and Q3 GDP was finalized at 3.4%. The ECRI was unchanged at -3.9%. Next week’s reports will be highlighted by the Chicago PMI and housing. Merry Christmas!

LONG TERM: downtrend probable

If anyone was questioning this bear market, it certainly has made its presence known these past three weeks: -12.4%. In fact, CNBC has been touting this December as the worse one since 1931. We checked, that one was the DOW was down 17.0%. The DOW is currently down 12.1% for the month. Of the seven major US indices we track, excluding the SPX sectors, only the volatile R2K has confirmed a bear market. As of Friday it has already lost 26%. The other six are all close. The NYSE, which we carry as an international index, has also confirmed a bear market. It is down 19.2%. It joins Australia, Canada, China, France, Germany, Greece, Spain, and S. Korea. Which are also in confirmed bear markets.

The long term count posted on the weekly chart remains unchanged. A Primary I bull market from 2009 completed in 2015. Then a Primary II bear market ended in 2016. The recent bull market, 2016-2018, was Major wave 1 of Primary III. This bear market is Major wave 2. There are three Fibonacci retracement levels that should provide support for Major wave 2: (38.2%) 2509, (50.0%) 2376, and (61.8%) 2242. Obviously the first one did not hold. Our worse case support has been around SPX 2400, which is also close to the 50% retracement, and the 2385 pivot.

MEDIUM TERM: downtrend

We are still counting this downtrend as a large double zigzag. A Minor A zigzag from SPX 2941-2604. Then a Minor B rally to SPX 2815. Then a Minor C zigzag down to SPX 2409 thus far. At first we thought SPX 2478 could hold (C = A). But it failed on Thursday. The next two Fibonacci supports are SPX 2309 (C = 1.5A), and SPX 2270 (C = 1.62 A). Lots of Fibonacci support levels between the bull market retracement and the C wave relationship: 2376, 2309, 2270, and 2242.

Technically, most of the RSI and MACD indicators have not been very useful in this avalanche of selling. We had thought that the “Tariff Man” comment could lead to a mini-crash. Guess this week was it. Currently, the daily MACD/RSI are both extremely oversold. The weekly RSI has a positive divergence, which usually ends downtrends during bear markets. The monthly RSI is now as oversold as it was during the 2015/2016 bear market. When markets are this one-sided to the downside it usually takes an “event” to reverse them.

SHORT TERM

Trying to track the short term waves during this downtrend has been a nightmare. Fifty, sixty point rallies followed by one hundred point declines have occurred on a regular basis. We even had a 100 point decline this week that took only an hour after the FOMC statement. The SPX/DOW and NDX/NAZ have all wiped out their entire 2018 gains in just two months.

Nevertheless, there are additional potential supports at the previous downtrend lows of this bull market: SPX 2408 Minute ii, and SPX 2322 Minor 4. Add them in to the previous four potential supports and we have: 2408, 2376, 2322, 2309, 2270, and 2242. The market hit SPX 2409 on Friday. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower and lost 1.8% for the week.

European markets were all lower and lost 3.7% for the week.

The DJ World index lost 5.2%, and the NYSE lost 6.1%.

COMMODITIES

Bonds remain in an uptrend and gained 0.5% on the week.

Crude remains in a downtrend and lost 12.0% this week.

Gold is still in an uptrend and gained 1.4%.

The USD is now in a downtrend and lost 0.5%.

NEXT WEEK

Tuesday: Christmas holiday. Wednesday: Case-Shiller. Thursday: jobless claims, consumer confidence, and new home sales. Friday: the Chicago PMI and pending home sales. Best to your week!

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

About tony caldaro

Investor
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854 Responses to Weekend update

  1. stockop says:

    95.8% upside volume in NYSE. No confirmation in Nasdaq. Volatility crush today, but VIX is technically breakout retesting… ISEE incredibly bearish. amazing market for short-term traders still imo.

  2. torehund says:

    Think Fiona posted this at one time, and its a good one…Well Santa is here 🙂

  3. Dex T says:

    With a day like this you can expect the Federal Reserve to blow of Wall street in next month’s meeting.

    They will continue the interest rate increase in 2019.

  4. tommyboys says:

    Gary Lewis likely nailed this with zero fanfare below. Was looking at the 40 month moving average in April and called for the area to become a buy point due to its history and fib clusters. While he likely nailed the technical reason, it goes hand in hand with Tony’s call for a P2 low in the 2300/2400 area before a P3 launch – which he held steady amongst myriad doomers. Likely lots of backing and filling to come and possibly several retests in the 2300-2400 area but looks good for a low in that area – 40 MONTH moving average and P3 rally.

  5. travis01 says:

    Lol 100 pt days! Crazy. E*TRADE played me and wouldn’t let me short as much tvix monday afternoon as I had been playing. The one 100 pt day I needed a break.

  6. ewmarkets says:

    15 minutes to go. Looks like today will be the best day of 2018 and enter top 15 of largest daily percentage gain days.

  7. lml25 says:

    This rally is pretty ridiculous…lol.So was the selloff.

  8. phil1247 says:

    es 2460 target coming up
    als0 .50 ext short
    look to exit longs soon

  9. torehund says:

    What if this recent bottom is the second P-2 bottom, certainly looks like it on macd weekly readings testing the 09. The former P-2 in price from 2016 was very shallow on the macd reading. Now we have two P-2 bottoms, that should be sufficient 🙂

  10. EL MATADOR says:

    Traditional Wall Street Santa Claus Rally in fully swing!!!

  11. Page says:

    I am expecting SPX close 80+, Naz 300+, Dow 700+.

    • xEVAx says:

      DOW daily support/resistance/trend lines….. Im looking for the stick save to fail, break those blue down trend lines and I’ll think about a new high…. Could be another 4, the FIB date looms and it should give direction soon =)

  12. Looks like the massive quarter end pension fund rebalancing that Wells Fargo has talked about is in the works. Roughly $64 Billion over the next several days globally. Between $21 – $35 Billion domestically.

  13. lml25 says:

    It’s almost deja vu again.In 2016 I asked the question,if you could figure out crude oil—you could figure out equities.Jack up crude,you jack up everything else.PPT did it then and probably today and in the future.Whether today lasts or not,that’s the formula.TLT unembedded so the odds are this DOES continue for a while–maybe to 2620?GL all.C U tomorrow.

  14. Dex T says:

    $5.6 Trillion Asia Stock Loss Has Traders on Edge of Their Seats

    “With three days of Asia equity trading left for the year and low volumes across the board, traders don’t seem to be taking any chances.

    About $5.6 trillion of equity value has been obliterated in the region this year as the global carnage shows no let-up. And investors are bracing for volatile days ahead.”

  15. stockop says:

    don’t like the options numbers. ISEE not bullish. retail does have its moments, but I see key reversals in every sector in the market. market usually does not make it so easy.

    • $56 Billion got pulled from Mutual Fund as of the week ending Dec. 19th. That’s the biggest outflow since the week ended Oct. 15th, 2008.

      That having been said, $25 Billion came into ETF’s.

      • stockop says:

        I would say that those numbers are bullish. Except theyre putting it right back into the market. when the run on ETFs inevitably happens it is not going to be pretty.

        when moves are this telegraphed by the market and ISEE is at extremes it usually does not end bullishly. gonna need some EOD selling because we’re awfully close to a 90% up day. maybe retail got it right this time around.

  16. micky says:

    Seems the site is being spammed again, just like a while ago .

  17. chrisk44342 says:

    Phil- is it going to be a 38 special on the daily chart? https://invst.ly/9mehq

  18. Just printed the 38.2% retracement in the SPY at 241.37

    Having a great day in EXAS, GH, GNMK, IDXX. ILMN, and SRPT as posted this morning at 8:54 am.

  19. lunker1 says:

    aah is this correct?

    ES 60min 3BR conformed 1AM today stop 2324.88
    SPX 60min 3BR confirmed 12:30PM today stop 2346

    SPX daily 3BR would confirm tomorrow with close above yesterday’s open 2401 or high 2410? stop 2346

  20. Glad Fiona saw my post before it was permanently deleted. She is the most diplomatic kind person on here. Wish i had her temperament. Good luck to ya Fiona! Hope you too my advice on Oil and stocks.

  21. Key Factor Mr. Warren Buffet Holding Company is Fully Diluted fund. They don’t print shares! Show me another Stock that’s Fully Diluted Today? Fiat common stocks are pure joke unless you invest long term as Mr. Buffet does! Only way to beat market makers is bet straight to win! Buffet knows the game long term term. Short term better be skilled trade.

    GL

  22. wanderer says:

    Looking for some mean reversion here, so I am short ES 2408 and 2412.

  23. ko68 says:

    Brent oil: Responded nice up from 50% fib of the 27 – 85 dollar move.

  24. Dex T says:

    What’s Warren Buffett Doing As the Markets Tank?

    “If you’ve been following the recent buys made public in Warren Buffett’s 13F filing, you’ve probably noticed that he’s made some horrendous bets.

    He bit on a rotten Apple, which has been nosediving in recent months and made some pretty awful big bank bets that have recently gone into freefall. Not only were Buffett’s recent bets abysmal, but they were poorly timed as the markets proceeded to fall off a cliff, with many of his holdings leading the way lower.”

    https://ca.finance.yahoo.com/news/warren-buffett-doing-markets-tank-175400558.html

    • DexT . . . Do you know what a 13F filing is?

      It is a quarterly fund holder filing with the SEC. The latest filing is from end of Q3… which means that filing is nearly 3 months old. Buffett could have done an awful lot to what your “article” presented over the last 3 months.

      • Dex T says:

        Yes I do and am aware of that. However, if you know ANYTHING about Buffett then you know he is NOT a day or short term trader. End of Q3 is a blip in the eye for him as he normally holds onto positions for YEARS.

        He is certainly holding onto the positions mentioned in the article and taking substantial losses on them.

        So… everything in the article is correct as far as I can see and whatever Buffett has done in the past 3 months does NOT invalidate what he did prior. He got caught with everyone else.

        • How would you know if he is taking substantial losses?

          How would you know if he has “hedged” some of those positions?

          You don’t.

          • Dex T says:

            Because the prices are lower than when he bought them in Q3. He certainly didn’t sell any of them in the past months as I mentioned above. Buying and selling within a few months time is NOT Buffett.

            Even they are hedged it doesn’t detract from the fact that he lost money on the actual positions at this point in time.

            But as I replied to T.A. stockman H below it may not even be Buffett but one of the money managers and potential successors. who is really making the decisions.

    • Well, in Fall 2008, if you recall, WB just kept telling people what a great buying opportunity it was. NOTE: He didn’t call or time the bottom in March 2019, so I’m sure he was down in early March as well, but his funds are all up tremendously as of Jan 2018.

      Therefore, while his “bets” on Apple/etc. are off, I’d bet he’ll still make money as time goes on. He doesn’t short the market, so he will always make money eventually.

      • Dex T says:

        I don’t disagree with that. Buffett just buys and lets the market do the rest. Just curious what he’s been up to.

        Considering that Buffett is 88 years old it may not even be him anymore these days.

        He has certainly handed off a lot more responsibility and is less active than he was in 2008-2009

        • Like all analysts, he looks for the best bets…the ones with low risks, and high potential upside. Is he always right, no.

          I read a book once that said most stock analysts/fund managers are no better than monkeys throwing darts at boards. The successful ones beat the market because they’re not diversified and are picking big gainers. However, when the tide sinks, they lose, too, and the book said that time averages will show that they are no better than the indexes. I can’t disprove that aside from asking those who disagree to show me one fund that has beat the index over a 30-year span. If they can’t, then best to stick with trading the indexes. That’s when I changed my investing to one that looks at the indexes and not individual stocks. I don’t have the time nor the patience to pick a handful of winners.

  25. Michael Wiseman says:

    Potential for key reversals on the daily charts for all major indices. $PM is far away though.

  26. Page says:

    OK, now ‘they the speculators’ are now talking 1/2 point interest rate cut in 2019.
    So it is party time, SPX ATH? Very much possible.

    aahmichael: your thoughts?

    • A.) Scott Minderd did not say anything about a 1/2 point interest rate cut.

      B.) Scott Minderd is not a “speculator”.

      C.) Scott Minerd is the CIO of Guggenheim and said that the Fed is going to pause and that there is a 50% chance of a rate cut in 2019.

    • Dex T says:

      I doubt that will happen. We get these remarks every time the markets close in the red.

      A market rally will simply reassure the Federal Reserve that Wall Street is, once again, throwing a tantrum and needs to be ignored.

      If the market continues to rally into the January meeting the Federal Reserve will continuing with the interest rate hikes.

      It the market drops or remains trading within a close range then they will simply hold

      As far as interest rate decreases we are going to have to see a lot more selling.

      • Dex T says:

        right now Fed fund futures are not predicting any decreases. Odds are higher in favor of an additional increase.

        • Your comment about “odds favor an additional increase” is not being reflected in Fed Fund futures.

          The Fed Funds contract expiring in Jan. of 2020 is yielding around 2.41% which is squarely within the current range for the Fed’s target rate.

          • Dex T says:

            My actual comment above is “Odds are higher in favor of an additional increase.”

            meaning that chances of an increase are higher than that of a decrease

  27. phil1247 says:

    and away we go
    bull above 2370 es

  28. Jordi G says:

    Hi Tony, Gold is very close to 1280. This is the maximum retrace allowed for wave B, isn’t it? If this zone is breached, then, We can consider the Gold bear market ended?

    • tony caldaro says:

      why would $1280 have any significance?
      bear market for another deacde

      • Jordi G says:

        Because some weeks ago I asked to you about the maximum possible for this wave B, and you said 1280 ( I don’t remember if you said 1280 or 128X, one $ up or down, is not much important for me), and that’s the reason I’m asking again, because today, the gold has been very close to the maximum expected for this wave B.

  29. phil1247 says:

    bears losing their grip………..
    push thru 2404 es
    opens the gates higher

  30. cj32 says:

    RE: $Gold and past deep corrections in SPX.

  31. Market is officially in “creeper” mode.
    Just took out the early morning gap high.
    Amazing what can happen when people stop “tweeting” for awhile.
    🙂

    • Tim Waters says:

      Never forget, good or bad, always Trump’s fault. Going to be fun watching him dismantle the Deep State the next two years. Thought the uniparty was upset when he announced the Syrian withdrawal? You ain’t seen nothing yet. MAGA! That means, Make America Great Again…in case you don’t know. Now, bring on the hate remarks. I’m ready. Meanwhile, the market bounces hard, just like all the indicators were SCREAMING that they would. Have a wonderful day!

      • Tim….. the “Deep State” ???

        If Trump is fighting the Deep State and the military industrial complex, then why did he raise the Defense Department Budget to a record high last year and request $685 Billion for 2019?

        Why has he appointed Patrick Shanahan as acting the Secretary of Defense…. an executive from Boeing?

        • Tim Waters says:

          “acting” is key word. He’s preparing to withdraw us from Afghanistan and other places as well. He’s concentrating on China because he knows they are THE overwhelming concern. Period.

    • tommyboys says:

      Nuthin to do with Trump – but keep referencing him…

  32. xEVAx says:

    I know it’s up a bit but here is my NDX count all prettied up, pretty much the same on COMPQ, SPX ect….
    60min

    weekly

  33. phil1247 says:

    rick

    looking at sentiment in a microcosm
    there was daily analysis here about looking to buy the precious metals and gold stocks
    while they were going down
    now that they have reversed course
    we hardly hear a peep about them

    hallmark of bottoms is disinterest ……………..

  34. Given some of the comments regarding LIQUIDITY recently, its interesting to note that $57 Billion came out of actively managed funds last month and $56 Billion went into passive funds.

    BlackRock set a record in November with $25 Billion in inflows into their ETF’s with another $31 Billion so far in the month of December.

  35. lml25 says:

    Last one today.Watching TLT to see if it gives up the embedded.A break below today-s low would probably mean Dimon is buying equities and selling bonds.An end of year/start of year rally seems likely–followed by a retest of the 2350 area and maybe more.TLT has to break down to confirm imho.GL all.

  36. Crude rally proving some support to the S&P.
    Some bargain hunting going on in the beaten down oil sector.

  37. fionamargaret says:

    $WTIC (oil) down to 34
    DWT (short oil) up to 26.5
    VXX, TVIX (short indices)
    Stops

  38. wanderer says:

    A flat close today would be interesting. It would prove all the “black Wednesday”, “orange Wednesday”, and “white Wednesday” scenarios wrong. It would probably also drain the accounts of the option buyers.

    • stockop says:

      a majority of option buyers aren’t buying weeklys. last week thru monday of this week pretty much slaughtered all call buyers regardless of expiration. people buying puts at comparable levels to 2015/2016. up would do the most damage to option buyers, but who knows how much further down we could go before this becomes a reality.

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