Weekend update

REVIEW

The week started at SPX 2417. After a gap down opening on Monday’s half-session the SPX closed at a new downtrend low of 2351. Trading resumed with a gap up opening on Wednesday to SPX 2386, which was quickly sold off, and a new downtrend low was hit for the 7th day in a row: SPX 2347. After that the market abruptly reversed, and by the end of the day the DOW had gained a record 1000+ points. The SPX closed at 2468. A gap down opening started Thursday. The SPX hit 2398 in the afternoon, but ramped up into a SPX 2489 close. Two days of spectacular up moves. Friday had a gap up opening, hit SPX 2508 early, dropped to 2473, then hit 2520, before dropping to 2477, and closing at 2486. For the week the SPX/DOW gained 2.85%, and the NDX/NAZ gained 4.0%. Economic reports for the week were sparse and to the downside. On the downtick: consumer confidence, the Chicago PMI, and pending homes sales. On the uptick: weekly jobless claims improved. Next week’s holiday shortened week will be highlighted by monthly payrolls and ISM. Happy New Year!

LONG TERM: downtrend probable

Sometimes the advantage of applying OEW to the indices can keep one a step ahead of the crowd. During 2017 we noticed Germany and Spain could be completing bull markets. They are still going down. Then in Q1 2018 China, Hong Kong, Singapore and S. Korea were completing bull markets. They are still going down too. Now that most of the world is in a bear market pundits are trying to justify it with many things, but especially a slow down in global activity.

 

In Q1 2018 the US had the biggest correction of its bull market, about 12%. But we knew it had one more wave up to new all-time highs before its bull market was over. It was a struggle with most of the world’s indices already in bear markets. But it got it done in September/October, and then rolled over into its own bear market.

 

We mention this now because those six previously noted foreign markets all look like, if our counts are correct, they are in their last downtrend of their bear markets. Four have been declining since Q1 2018, and two have been declining since mid-late 2017. Look at Hong Kong’s abcA-B-abcC. This kind of pattern is normal for completing a bear market. Just when nearly everyone is onboard with a bear market scenario it could be ending.

MEDIUM TERM: downtrend

As for the US, the four major indices, SPX/DOW and NDX/NAZ, have had only one downtrend. It has been quite complex with many, many 60-100 SPX point waves. In fact, several times we labeled a tentative green Intermediate wave A low expecting an uptrend. All we got was a rally, and then lower lows. All along we felt the structure we had labeled was correct, but we were not quite sure about the wave degrees. This week’s activity, we think, gave us a hint.

If we look at some of the minor US indices from their bull market highs, we observe that they had a downtrend, an uptrend, and a downtrend. All while the four major indices have been in one downtrend. These indices are: R2K, SOX, TRAN, XLB, XLF, XLI, XLP, and XLV. Seems odd that the financials, industrials, transports, semi’s, and small caps all display the three trends, while the major four do not. Even the NYSE had three trends.

As a result of this weeks market activity, and the above noted observations, we are seriously considering that Intermediate waves A and B have already occurred. And Intermediate wave C has been underway since November. This count is posted on the DOW hourly and daily charts.

SHORT TERM

When considering everything previously noted. It is possible that the next selloff could not only end the bear markets internationally, but also in the US. At the beginning of the bear market we expected a short one of about 15%-20%. So far it has held within those parameters. We had thought that SPX 2400 would be the maximum downside. We got that wrong as the SPX has already hit 2347.

We see two potential support levels for the next, and maybe last, selloff. SPX 2310 C = 1.5 A, and SPX 2270 C = 1.62 A. The DOW C wave would have a 1.62 relationship to A around the SPX 2310. While is no pivot at SPX 2310, there is one at SPX 2321, 2286 and 2270. Also if the potentially last selloff is not too severe many positive divergences would be set up in the daily and weekly charts, with oversold monthly charts. These typically work to end downtrends and bear markets. We added some charts to the very end of stock charts to display how oversold the major indices really are. Here’s one.

The rally from the downtrend low at SPX 2347 looks corrective. We have observed three waves up (2414-2394-2468), three waves down (2414-2444-2398), then three waves up (2508-2473-2520). Notice the two rallies are nearly equal at 121/122 points. Symmetry. After the high the market setup a double negative divergence on the hourly chart and the SPX dropped to 2477. So the second set of three waves is complete. Will we get a third set next week? Or does the market head down from there? Short term support ended at the 2479 and 2456 pivots, with resistance at the 2525 and 2575 pivots. Short term momentum dropped to neutral after the double negative divergence. Best to your trading in the NY.

FOREIGN MARKETS

Asian markets were mixed on the week and lost 0.3%.

European markets were mostly lower and lost 0.6%.

The DJ World index gained 2.0%, and the NYSE gained 2.3%.

COMMODITIES

Bonds continue to uptrend and gained 0.3%.

Crude continues to downtrend and lost 0.6%.

Gold is still in an uptrend and gained 2.0%.

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

NEXT WEEK

Tuesday: holiday. Thursday: jobless claims, ISM, construction spending, and auto sales. Friday: monthly Payrolls, and unemployment rate. Happy New Year!

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

About tony caldaro

Investor
This entry was posted in weekend update and tagged , , , . Bookmark the permalink.

471 Responses to Weekend update

  1. Good morning all. Atilla (@xtrends), posted a very interesting tweet. In his opinion, it could explain the 1 minute ramp in equities at around 3:58 On New Years Eve. The tweet has 3 charts with long term trend lines in the DOW, SPX and Wishire 5000. In each of the 3 charts, the ramp brought the index at or above a long term trend line. Atilla is big on and is “creative” in, drawing trend lines. I’ve been following him for years and he is an amazing trader. The chart below in the SPX.

    https://pbs.twimg.com/media/Dvy9L3mU0AEuwe4?format=jpg&name=medium

    • phil1247 says:

      hny asa

      looks like he drew that line after the close monday
      i call it BS
      if he had drawn it on friday i would be impressed

      • You lost on this one buddy. Not speaking for Atilla, what he was trying to say was that last minute ramp brought the SPX at/above a trend line. This is a monthly chart. What does last Friday have to do with this analysis?

        Just saw you posted a follow up chart on SPX, I had questions about your post yesterday…let me review your chart/analysis, might want to get back to you….HNY

  2. Jack kendo says:

    U.S. vs China stock market:
    Who wins the Trade War, so far?
    One Year performance $SPX vs $SSEC
    $SPX closed at 2506.85
    $SSEC closed at 2493.90

    cheers!

  3. Jack Lad says:

    New year, old stories e.g. Dr Copper still decidedly ambivalent… for now…
    https://wavecount.blogspot.com/2019/01/copper-uslb.html

  4. zvyezda says:

    Happy New Year’s, Tony, and to all on the board!

  5. Jack kendo says:

    -20% is an important mark – PPT always intervenes at -20%.
    It will get very ugly, sell into the rally is the mantra in the bear market.
    2008 bear market down about 60%.
    In my conservative estimation, 2019 market could easily down 60% from the Top.
    I don’t think we can get to the 38% this time as the market is so weak, so fast.
    What can we see from the comparison of the charts?

    cheers!

    • E says:

      Thanks Jack. I think you are right about more down side to come. However I don’t think we’ve got bottom of 3 yet this time around. The wave division doesn’t work out.

      • Jack kendo says:

        imho, Since the market Top, we have the second largest rally points (173.69) in the quickest time (3~4 days), so the degree should be higher of wave 4, and should not be a subdivided 4th wave of wave 3.
        I see it as wave 4 here, and I see 2520.27 should not be exceeded.

        Dec 26 ~ Dec 28 /Dec 31 (3/4 days)
        2520.27 ~ 2346.58 = 173.69

        Oct 29 ~ Nov 7 (7 days)
        2603.54 ~ 2815.15 = 211.26

        Nov 23 ~ Dec 3 (6 days)
        2631.09 ~ 2800.18 = 169.09

        cheers!

        • Twosidedtape1 says:

          Agreed Jack. And if it’s a wave of a higher degree then it needs a wave b and c. So far all we have is an a with an abc pattern in it which is too small to be minor b and c. I conclude therefore that SPY is only in minor a of intermediate b.

      • I agree.
        3 of 3 done.
        But 5 of 3 still to come.
        Gap down Wednesday

    • stockop says:

      the quality of your information has improved big time. nice charts man.

      I like it. my possible take is your current wave 2 label in 2008 is 2 of 3. 4 alternated as a flat. we have the opposite situation in 2018-19 with a sharp wave 4 after a flat wave 2. looks like a good analog. would fit asaraniti’s quarterly statistics he posted below.

  6. kingfrogcash says:

    The DOW is up 6.7% since The Great American, President Trump, said buy the dip.

    • fenster6 says:

      And down 20% since he boasted how good he was for the stockmarket (multiple tweets)

      • tommyboys says:

        Even after correction – so far – we’re STILL up 38% from when we found out Hilary was not going to be able to continue Obummer’s costly policies. Lotta TDS still out there.

  7. One of the reasons why I was thinking about scaling back into the market during that 100+ point ramp in SPX last Wednesday…..Hope I get a second chance at least a bit lower at SPX 2413-2433 (?)….if not lower.

  8. Jan Effect ? Small Cap Index RUT Inside Day Setup

    Looks more bullish than bearish

  9. Theodore Lerts says:

    I would not be fooled by any near-term bounces, especially if you are a longterm investor. Things are looking very, very, dark. Worse than most foresee. Best of luck.

  10. lunker1 says:

    and a SPX 60min 3BR short Noon-3PM

    • Twosidedtape1 says:

      Would make a nice top for the rising wedge.

    • Vince H says:

      You must be looking at top of the hour bars? 12, 1, 2, 3.

      I have it set to 12:30, 1:30, 2:30 and don’t have a signal.

      BTW, if you look at the daily SPX, there is a 3BR buy signal 12/27.

  11. phil1247 says:

    30+ point gap up open wednesday

    stage is set with 3 hour es boll bands tightest since the 30 point gap up on Dec 3

    if target is hit at 2548 the gap up would be 40 points from here

    lets see

  12. travis01 says:

    Ha SNP rose 17 pts in last 1-2 minutes. Guys messing around.

  13. tony caldaro says:

    Happy New Year everyone

  14. Dex T says:

    Less than 10 minutes left until the year end but the markets set to close negatively for the year

  15. Twosidedtape1 says:

    Today’s price action in SPY makes me look out for a gap up over 250 on Wednesday morning. Whether it holds is another matter entirely.

    • Dex T says:

      A gap up and them sells off the rest of the day into the close?

      • Twosidedtape1 says:

        Gap up likely, don’t know what happens after that. Daily will be getting pretty overbought with another candle higher. If it gaps up then the retest of 250 from above should tell us something.

  16. travis01 says:

    Happy New Year and Clemson for the Natty!

  17. Dex T says:

    Two giant US pension funds admit there’s a BIG problem

    “And today, the nation’s 1,400 corporate pension plans are facing a $553 billion shortfall. And, according to Boston College, about 25% will likely go broke in the next decade

    According to credit-rating agency Moody’s, state, federal and local government pension plans are $7 trillion short in funding.

    The reason for this crisis is simple – investment returns are too low.”

    https://www.fxstreet.com/analysis/two-giant-us-pension-funds-admit-theres-a-big-problem-201812310550

    • Dex T says:

      Not really a big surprise to most investors but we will be hearing a lot more about this as the bear continues. Pensions forced to remain fully invested and rake on more risk to achieve unrealistic returns are going to be taking a big hit as the selling accelerates

    • mcgcapital says:

      They’re broke because of bond yield compression.. given their liabilities are greater than their assets, if all markets fall across the board including bonds, the pension deficit probably falls too. As soon as term premiums rise their financial positions will improve significantly. Their liabilities are super sensitive to the discount rate used so that’s why they have a deficit in the first place. Company contributions have been at record highs and we’ve had strong markets, so it’s not an asset side of the balance sheet problem

      • They’re broke because of their constituency.
        It’s like Social Security.
        People defer investing and put in monies to their “pension”, and when the time comes to retire, they become unreasonable on what the “promises” are/were.
        Let’s take a look at the teachers’ unions or CalPERS.
        California is broke, yet, these people think that they are owed something?
        They are the ones who made the state bk!

        Not saying it’s right or wrong.
        However, like Social Security, if you have millions, do you really need Social Security?

  18. As Yale Hirsch points out in his Stock Trader’s Almanac, as goes the month of January so goes the year. Since 1950, this indicator has had a 75% correlation, and that’s including 10 flat years.

    And every down January since 1950 preceded a new or extended bear market, a flat market, or a 10% correction. As for the first five days of January, the last 43 times these days were up, the market had full-year gains 83.7% of the time, with an average return of 13.7%. The 25 down “first five days” were followed by 14 up years and 11 down, for an average gain of 1%.

  19. David Cupples says:

    It looks to me like the Dow is running into resistance from Feb,Apr,May of this year. Maybe a bear flag building and taking us down below 20 grand?

  20. mcgcapital says:

    https://mobile.twitter.com/dwyerstrategy/status/1079726431528280065

    https://mobile.twitter.com/Ralph_Acampora/status/1079745693240254464

    Looks like some of the perma wrongs are bullish going into next year. I always find that their analysis appears to be done in a vacuum where price action doesn’t matter, and only selective fundamental data points are deemed important, with key ones ignored. Once these turn bearish that’s when we probably bottom

    • Dex T says:

      From the first twitter.

      “Clearly, our targets through 2018 were simply wrong”

      • mcgcapital says:

        It’s not that he got one wrong that’s the problem.. it’s more that he never acknowledges the underlying view is off. He’s blaming it being wrong on irrational behaviour from other participants (I.e. selling while he’s buying) rather than accepting there’s something wrong with either his earnings estimates or estimate on PE ratio. Means he will never learn from his mistakes

        • Dwyer missed getting long AFTER the February collapse, which was due to the players that were short volatility and had to cover… which forced the market down….1500 points on the unwind.

          Dwyer called for a 5% rally and then a re-test of the low (2532) He was definitely short to intermediate term Bearish, which was saying a lot since he had been a long-term Mega-Bull.

          On March 9th he showed up on CNBC to say that he would be wrong about his Bearish prediction if the S&P traded 2780. That is pretty much where it was trading with 1 hour to go in the session that day.

          He stubbornly waited for a retracement and test (and break of the low) that never came.

          This is why I never “follow” any of these sell-side strategists. I simply want to know what they are saying so that I can see what the CONSENSUS is…. and act appropriately if I see “cracks” in their case.

          • mcgcapital says:

            He’s very one dimensional.. basically worked out what he thinks earnings will be, then extrapolated out what the current PE was to get a target price. Then he just talks the market up towards that price. Never anticipated any of the corrections. When one arrives, always assume it will rally, retest the lows, then up again.. and blame some sort of external influence for spooking investors as earnings and macro is good etc.

            Now if it was me and I’d made his calls, and the market fell 20%, i’d start again and think about whether my starting assumptions were wrong. The market is usually right which should tell him his earnings forecast is too high or PEs needed to come down for a multitude of reasons. But instead he’s basically saying the market is wrong and he’s right, and that eventually everyone else will just agree with him. Arrogant in the extreme, I’m enjoying watching clowns like him consistently mess this up

    • phil1247 says:

      Ralph Acampora CMT
      @Ralph_Acampora
      The Godfather of Technical Analysis.
      >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
      careful there mcg…..
      you dont want to be sleeping with the fishes 😉

      • mcgcapital says:

        Lol the dinosaur of TA more like.. I’m yet to see him nail a call yet, basically just extrapolates the previous couple of days’ moves without watching to see if price could be topping or bottoming or whether it’s in a continuation pattern

    • stockop says:

      Acampora flip-flops more than Gartman. He’s been a big bear the past few weeks and a single day of price action will make him 180. hopefully he waits for us to take out the lows before throwing in the towel this time around. I’m pretty sure he turned bullish on the 26th and is just sticking to it. without a doubt feel better doing the opposite of what the “godfather of technical analysis” is doing especially during emotional/volatile times. one day should not make someone flip from big bear/next recession is here to “the bottom is in”. Sadly, he isn’t always wrong.

    • Tom Fischer says:

      Thanks for the links M CG.
      Tony Dwyer is interesting, but I could never understand how he could rely his forecasting so heavily on yield curves, when the FED has so massively been manipulating interest rates. How could anyone think the same historical patterns would apply, and presage the best market?

    • tommyboys says:

      Wesbury got it substantially right and calls for more of the same in ’19. You guys on this blog are WAY too bearish. Those pension shortfalls you sight have been a problem for decades and are nothing new. All depends on assumptions. I’d bet on Tony’s either “already bottomed” or another test of the lows to finalize the ‘C’ and “short lived bear” over WAY before all the doom and gloom.

      https://www.ftportfolios.com/Commentary/EconomicResearch/2018/12/31/dow-28750,-sp-500-3100

      • Dex T says:

        not familiar with him but looks like he made the same call last year.

        2018: Dow 28,500, S&P 3100

        So he is completely wrong and missed the entire start of the bear.

      • mcgcapital says:

        Pensions liabilities are usually based on market derived assumptions, so the bond market sets what they are via forward rate pricing and inflation expectations. The actuaries have limited scope to change assumptions as they need to be consistent over time. My point was that it’s not a big deal if bond yields rise as that will cause a re-valuation of liabilities downwards. But if that happens it’s not good for risk assets either.

        I hope I’m wrong about the markets, but so far I’ve not seen anything to suggest I am. In fact, everything is providing me confirmation I’m right if anything. HNY Tommy

  21. micky says:

    Thanks Tony for all your time keeping the best EW site out there, HNY to you and the gang.!!

  22. Bill Manscoe says:

    HNY to Tony and all. I hope 2019 is a profitable year for all.

  23. Jack kendo says:

    cheers!

  24. lunker1 says:

    Looks like a SPX 60 minute 3BR 10:30AM-1:30PM on the long side

  25. 10 year yield down to 2.71

    Still cant believe that we have a Fed Chairman who said that the balance sheet was on “auto-pilot”. I was just shaking my head and re-playing this in my brain over the weekend. It’s as if Powell (and others at the Fed) see the $50 billion run-off as some kind of an accounting transaction that has nothing to do with monetary policy. It certainly wasn’t “viewed” that way under QE.

    In fact, one Fed official remarked that it was like “watching paint dry”. Another dubious appointment by Donnie. Hopefully Powell will figure out how to pull his head away from all of the “dot-plot” forecasting and communicate better. It doesn’t take a rocket-scientist to look at a 2.71% ten year yield to make a current assessment.

    Interestingly enough, I’ve heard some market participants claim that the current $50 billion a month run-off is equivalent to 1.5 – 2 rate increases.

    Next on the calendar will be a White House requested meeting between Donnie and Jerome. History has shown that such “meetings” do not work out real well and are full of risks. (just ask Arthur Burns from the 70’s). – – – Donnie and Mnuchin really just need to shut their traps. It’s amazing how unsophisticated these two clowns are when it comes to the financial markets.

  26. fionamargaret says:

    TVIX….see what you think….up to 100
    https://stockcharts.com/freecharts/gallery.html?TVIX

  27. Jimbo says:

    Are the US markets open until 4pm today or early close?

  28. stockop says:

    as aah said over the weekend positive Trump bumps have been great short opportunities. Russell leading us lower. volume is absolutely horrendous. slow grind down on light volume is no bueno. and yet people are buying calls. if we keep this up I would expect the day after new years to be pretty ugly once the big boys come back to play. at current pace we’re going to have lighter volume than the half day on Christmas eve.

    I see a H&S on the Hang Seng. Would not be surprised to see China “lead” us lower. I think theres a good chance we do end up tagging 2600 or close to it at some point over the next few months if we get a wash out soon. Anecdotal, but I’ve seen quite a few people online talking about investing in the market after years of being on the sideline. I personally believe a strong rally after a washout and anyone whose been waiting won’t be able to resist and those who held will be congratulating themselves for not panic selling. than the real rug pull and fundamental decline begins.

    I keep thinking about Jeffrey Saut and how he “froze” when the Dow Theory sell signal was given. It sounds to me like many fund managers got bailed out by the market because I assume they “froze” every time its been given since 2009. That’s luck and not premeditated speculation. From my limited experience in the market it does not seem logical for the market to reward behavior like that and I would assume that these are the money managers who have outperformed over the past few years. What happens if they begin to underperform, redemptions accelerate, and they try to hit the exit door at the same time?

    • Dex T says:

      Pretty much. QE and zero % interest rates made a number of people look like good investors when they did nothing and kept some hopeless people afloat. When that ended they fell to the wayside.

      One thing is certain. Just about every single fund manager got caught by this bear market and didn’t sell so they will ride the market down. Next year they will join in the panic selling.

    • tommyboys says:

      I’ll take that bet stockop. NYE about the lightest volume day of the year. Big noys cone back Wed and buy it up imvho… HNY to all and special thanks to Tony for his relentless commitment.

      • tommyboys says:

        Excuse typos. Fat fingers!

      • stockop says:

        we shall see. either very bullish retests right now or H&S. imo the same light volume that was bullish the past few years is related to the trend. i dont think it bodes well for liquidity and the current trend is down. looks like a big inflection point here.

        • mcgcapital says:

          Will start the New Year with a sell off.. January usually starts in the direction of the prevailing trend more often than not

          • stockop says:

            I’m looking at January 2016 for a semi-analog right now. Interesting piece of information about following the prevailing trend. Going to have to dig into that myself. Looking a little bullish right now short-term if we cant get selling into the close.

            • mcgcapital says:

              Well since 2011 when I started trading:

              Jan 2011 – we’d rallied strongly into Xmas 2010, bullish January.

              Jan 2012 – kind of edged higher into year end from an early November low. Bullish January

              Jan 2013 – rallied into year end from November low. Very bullish January which continued all year

              Jan 2014 – we’d rallied all year 2013. January started bullish for 3 weeks then we had a correction

              Jan 2015 – we had a Santa rally but December was down as there was an early month sell off with oil prices. Weak start to the month, rallied 2-3 weeks in following the ECB QE meeting

              Jan 2016 – choppy December, recovered somewhat from an early month sell off. Ugly January, bottomed 6 weeks later and then 2.5 year bull trend

              Jan 2017 – strong end to 2016. Breakout to new highs on loads of markets start of Jan with global synchronised growth story, strong year

              Jan 2018 – rallied into year end 2017 on tax cut euphoria. Started January strong, topped 3 weeks later then down 15%

              So that’s 8/8 this decade in terms of the start we’ve made vs year end trend. Doesn’t mean we won’t bottom and rally in January though, just that we likely start weak. Price action is supporting that too

    • A.) Volume on a pre-holiday session like today would not be expected to be anything but light.

      B.) I’ve mentioned this before, but I will mention it again…. mutual funds suffered redemptions of $56.2 Billion in the week ended Dec. 19th, the biggest OUTFLOW since the week ending Oct. 15, 2008.

      C.) People give equity fund managers money to actively invest in the equity market. By doing so, there is a pre-disposed assumption that the client wants exposure in equities. Equity fund managers are usually long with a minimum of cash on hand. It’s what they do. They don’t run their fund like a “hedge-fund”.

      D.) Have equity fund managers benefited from a Federal Reserve “put” over the years? No doubt about it.

      • riderbobo says:

        Happy New Year Michael.

      • stockop says:

        A)”at current pace we’re going to have lighter volume than the half day on Christmas eve.” the market closed 3 hours early and it was a holiday, too. that is what i was comparing today to and i think the volume is worth noting.

        B) It sounds like this is bullish to you? The market is up almost 200% since that time. That means a fraction of the total shares in outflow $s (i.e. not as widespread as 2008. I don’t see why this number couldnt go higher.) According to Yardeni’s numbers the current reading showed record foreign equity fund outflows with room to go for Domestic flows to reach even 2011 levels.

        C) valid point. in regards to the cash at hand do you by chance know where the data for mutual fund cash levels can be found? No matter how hard i look i cannot find it. Would like to know what the managers themselves are doing right now and not just investors. It still doesn’t take away from the fact that this sell-off has caught almost all money managers with their pants down who have no plan other than praying we continue the bull market.

  29. travis01 says:

    Doc, you see any key levels for reversal this morning that I don’t? I missed that Friday move at 2519 that you and AAH called. That was exceptional. Guess I didn’t do enough homework on the day. I don’t see enough push to keep this above 2500 right now. TIA

  30. scorp100 says:

    IF today’s bump in futures and then in cash is because of Trump’s China trade talks progress comments, doesn’t look like market has much confidence in that.

    • That’s what may have caused the ramp. The fact that China’s economic reports were terrible fuels the thought that China may be willing to budge a bit. Then word got out early around the open that Trump called Xi and not the other way around. Meaning Trump wants to make the deal not Xi. Market is discounting Trumps tweet, $RUT now down.

      • Dex T says:

        The China trade issues complex and will be ongoing for a while. The uncertainly is likely one of the causes of the current bear

        The Chinese economy will be in permanent tatters if they lose the trade war and don’t want to budge an inch. Their entire economic prosperity in the past 20-30 years is built on their favorable trade relations at the U.S. expense. If Xi gives in even a little they will be hurt.

        Trump has to hold firm and continue to squeeze them using any means necessary.

        • Dex …. agree 100%

          1. Xi has patience that can last for years. Trump’s patience comparatively speaking, is a tweet (I support Trump).
          2. Low level US and Chines trade negotiators are meeting next week. If anything positive comes out of the meeting, the next meeting will be scheduled in the second half of January. That’s when the senior representatives will meet. Therefore, I don’t expect anything of substance for at least 2-3 weeks.
          3. Trump as any POTUS, will always put their best spin on an issue to buoy the markets. So I expect favorable tweets from Trump on this issue more next week than this week.
          4. Xi (China) and Trump are stubborn and sharp negotiators, so both sides will have to capitulate somewhat, to negotiate a deal. I don’t think that happens for a while as Xi is not giving in a bit on intellectual property and that is a deal point for Navarro/Trump. I expect China to cut a deal but nothing close to what Trump is asking for…and both sides will claim victory.

  31. phil1247 says:

    rick

    at 8AM today silver was just past the – 618 extension long target

    if you didnt take money off the table there you were asking for trouble

    rebuy at larger extension long support

  32. M1 says:

    Was 2346 an important low and the bear market is ending as some bulls say OR it was just the first wave of the third wave down and the most exciting part of the bear market is around the corner as some bears are saying ??

    • ewmarkets says:

      Don’t think it has been determined yet. I guess it’ll depend on what will happen with trade war. One wave at a time. So far, market is very similar to 10/2007-1/2008: -20% in 14-15 weeks in a 3-wave pattern. If it follows Jan. 2008 script, next wave seems to be up to SPX 2573-2585 area then re-test the low.

    • M1 says:

      I agree. And MACD may be suggesting the first wave down is bottoming …..like it did in Jan 2008. Unless we see a sharp decline from this point.

  33. micky says:

    A small tip for the guys doing voice recordings. It’s very irritating for some to hear nose- breathing sounds.

  34. Greg Polites says:

    Hi Tony – my SP500 indicators (https://hgpolites3.wordpress.com/) are now forecasting a minor bounce then a decline to new lows. After that move my indicators typically are not as extremely oversold and then generate a new buy signal (something we’ve not had yet in this decline). So this aligns with your current weekend call.
    Happy New Year and wishing you a healthy 2019, Greg

  35. Observation. I often mention the inverse relationship between /VX declining and /ES rallying. The chart below is the /VX futures. If you look at Friday’s trading, note the 2 white dotted lines, the high and low anchors, they are the high and low of the day. Note the activity of /VX late in the day on Friday…/VX rallied (stocks sold off) BUT hit a brick wall at the red line, that is the 61.8% Short. From that red line, /VX started it’s decline and stocks rallied to current levels this morning. NOW….

    Observation.

    1. If /VX trades down to the bottom dotted white line, the low anchor, that translates to the /ES testing the 2 profit targets, the green lines I mentioned in my previous post. If /VX tests that line and rallies off that line, /ES will have the pullback I mentioned in my earlier post.

    2. /ES could trade down through the low anchor, to the yellow line, that is the large 50% measured move LONG. Should /VX decline to test that level, /ES will rally through those 2 profit targets like a hot knife through butter!!!!!

    All this will occur during the morning session. IMHO, these are the key levels to watch this morning..

    • travis01 says:

      Asa, cannot see logo on chart but do you have a really good chart program that works easily on ipad? Or just what is easiest one for computers…trade or swim, TD Amer, etc? I travel a lot and think I want to set up an ipad for quick analysis vs my laptop. I don’t chart much but use simple fibs in program with other tools. Thanks

  36. Good morning all.

    /ES trading bullishly. There are 2 targets above, the 2 green dotted lines at /ES 2517 and 2520. Hopefully, /ES trades to and not through these targets, if so, there wil be a 50% long entry around /ES 2500 (it depends on the level of the top)…… the low anchor is 2476. If /ES rallies straight up above 2522ish, then /ES could continue higher and I have to wait to see the high before drawing up the next setup. HNY.

  37. mcgcapital says:

    I’m not a big believer in Elliott wave but when I think about it, since 2009 the market has followed an Elliott wave pattern perfectly:

    March 2009-May 2011 was Wave 1, widespread pessimism and a disbelief that we were again in a bull market.

    May 2011-October 2011 was Wave 2, lots of people worried that the retrace higher off the 2009 low was over.

    October 2011-May 2015 was Wave 3. Wave 1 of 3 there was still skepticism, but after wave 2 of 3 in spring 2012, there was a change in sentiment sometime between when Draghi said he’d do whatever it takes to save the Euro in July 2012 and the Fed starting QE 3 in Sept 2012, there was a realisation that yes this is a bull market, and that set up wave 3 of 3. I’ll point this out.. over that period and 2013 it was very easy and comfortable to be long. There was widespread bullishness, but that wasn’t a contrary indicator because during the strongest part of the bull phase everyone is bullish and its what keeps driving us higher. We can expect something similar now with the bear market.. people will say that sentiment sucks, but it’s what you need for markets to consistently fall. Wave 4 of 3 was October 2014, followed by a choppy period with an upward bias for wave 5 of 3 in late 2014-early 2015.

    May 2015-Feb 2016 was wave 4. Consensus was that the bull was over, lots of valid concerns but the cycle was extended by policy response from the Fed, ECB, BoJ, PBoC and OPEC.

    Feb 2016-Sept 2018 was wave 5. The break to new highs in summer 2016 led to optimism, and the election of Trump on a pro business agenda comfirmed it. Then a failure to have any sort of corrective pullback throughout 2017 led to complacency, and finally euphoria between Nov 2017-Jan 2018 once the tax bill was passed. That ended the bull for global stocks, and the Jan-Sept 2018 period was basically a transition in trend from bull to bear with various markets topping out at different times in that period, and the US market being the strongest which it so often is near the end of bulls due to a flight to quality.

    John Templeton said that ‘bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria’. I’d argue that this cycle has followed that pattern almost to a tee. It also tells me that we have way more to go on the downside as there are still loads of people saying is it over yet, when is wave 3 of 3 etc. I’ll begin to think there’s enough pessimism for a new bull when people give up with that and also when the financial media clowns are bearish rather than uniformly bullish longer term. That probably won’t happen until we get some bad earnings and econ data as that’s when there will be widespread agreement on what’s happening.

    I’m almost a convert to EW after writing all of that. But it wasn’t so easy to identify in real time. But that’s a non wavers take on the wave pattern

  38. tony caldaro says:

    NFL
    Last year a guy, Nick Foles, who nearly quit the game took the Eagles to the Super Bowl and won.
    They were underdogs every playoff game.
    This year Nick took over the Eagles when they were 6-7 and just took them to the playoffs again.
    Most likely they’ll be underdogs every game again too.

  39. J.Wenger says:

    Thanks Tony. I think we may have stumbled upon a new indicator; it seems that we see a huge uptick in haters around price inflection points. We could call it the H-wave. Jokes aside, really appreciate your work and all you do for us. Here’s to your health in 2019! Happy New Year to you and this community.
    https://www.invest-safely.com/stock-market-outlook-2018-12-30.html

  40. tommyboys says:

    Dow fut open approx +175

  41. Matt Frailey says:

    Here’s my weekly market newsletter – quite comprehensive, 60 min audio

    https://breakpointtrades.com/free/legacy/?nl_id=4088

    Weekend Newsletter Dec 30th 2018

  42. xEVAx says:

    DOOM count, wave one impulsive leading diagonal needs to see 6922 to overlap 1…..

    • xEVAx says:

      Now lets look at the ED scenario….

      • xEVAx says:

        Sorry again, as you can see here between COMP Q and SPX, the last up wave was a leading diagonal in 1 and a ED in 5 with an impulse in between…. The SPX had an ABC instead of a leading diagonal on that infamous wave one from the primary wave 4 low at 2553 and then did all of 5 in an ED…. It can count either way down so far and the reversal level (if we have one) is important, more telling would be an impulse down after a clean impulse up…. Wave 4 in this grinder from the flat primary 4 have been vicious impulse waves with the up waves ED’s no reason to expect much change until we have more clarity…. An ABC down would favor the ED but we would have to bounce just a bit to 2533 then straight down ABC and bounce hard to confirm ED in C…. Bottom line clarity will hopefully be coming soon…

  43. vivelaamo says:

    Thanks Tony. Happy New Year to you and everyone on this blog. Even Gary.

  44. Thank you Tony for sharing your analysis. Seasons Greetings and Happy New Year.
    My thoughts:

  45. tommyboys says:

    Dow futs indicated +100+

  46. phil1247 says:

    tore

    you would probably be good at this
    its like surfing

    • torehund says:

      Kite surfed in my heydays, pretty risky in the waves, if something had gone wrong. Then I switched to surfing, more skill and lesser risk. Still have some unruly smallcaps 🙂
      Base jumping and free solo climbing is scary..much more so than loosing money 🙂
      Dont you think its TBT time, looks ready freddy as we speak 🙂

      • xEVAx says:

        On the short end its tempting to take profits but why even speculate with short term bonds??? Corporate’s look scary here and could be the long awaited pin…. I do think the FED is done with rate hikes and possibly history and done for good should things break down here….

      • phil1247 says:

        not yet

        bonds still bullish
        had eight weekly lower highs on $TYX
        but maybe soon ….

    • tommyboys says:

      Cool stuff phil. Watched a base jumper at Sleeping Bear Dunes jump to his fate a few years ago as his chute tangled on the way down. Risky for sure.

  47. fionamargaret says:


    Thanks Chris Kimble

    https://www.iris.xyz/
    Thanks JPM

    Thanks Tony.

    • fionamargaret says:

      Going with harmonic waves emanating from the edge of the Universe, the numbers suggest…..

      $SPX down to 1851
      $WTIC down to 34
      TLT up to 143
      CAT down to 107
      DIS down to 85
      BA down to 293
      SMH down to 71
      SPY down to 193
      DIA down to 181

      …but if you like a little more finite, the S&P gained 341% from the 2009 low, and considering the usual correction is 38.2% to 61.8%, that would give us a low between 2071 down to 1525.
      My numbers suggest 1851…. a permutation, using EOD data from the last few years….x

      • fionamargaret says:

        Plato suggests music gives soul to the universe, wings to the mind, flight to the imagination, and charm and gaiety to life and everything…

      • fionamargaret says:

        2940, 2404, 2071, 1803, 1535, 1152……

        I had 2185, 2609 from 1000 on the way up, and that was solely from Tony’s site (and 3 posts or so) and yes he allowed me, with his blessing, the privilege of posting music/commentary in the evening.
        Funny how X takes on a different meaning.
        Andrew Carnegie (steel) through his foundation, took me under his wing around the age of eight….

        Incidentally X is down to 12…

      • fionamargaret says:

        GLD is down to 950, and SLV is down to 11….

    • johnnymagicmoney says:

      That’s really a worthless chart…..so when interest rates rise the housing sector slows???? Who would have thought!?!?

      • fionamargaret says:

        Some people like Kimble, and he is kind enough to send them to me free….I knew his dad better…but “don’t look a gift horse in the mouth”.
        If you don’t have something nice to say, just let things be……or send a better one….x

  48. Philippe V says:

    Long Term: Downtrend probable !? What’s the point of this comment ? How are readers supposed to understand it and act upon it ? Isn’t 20% a sufficient move to validate a LT confirmation ?
    Your R2K chart has the same subdivision as the SPX from the top of September. An Int a, then an Int b and an Int c in progress. Yet you claim that R2K has had a downtrend and uptrend and a downtrend while SPX has only one downtrend ?! Why so much confusion ?
    For weeks and months you were calling for much higher prices for the top of the market, well beyond the current top at 2940.
    Then when the collapse started, at the end of October you offered several downside targets at SPX: 2675, 2656, 2632, 2594 and 2587. You were as always too optimistic and throughout the whole downtrend you had to adjust your targets lower again and again, weeks after weeks as your stated levels were consistently blown by the market.
    Today you lowered your expectations for Int c to SPX 2310, 2321, 2286 and 2270. And you claim that after Int c the bear market will be over totally dismissing the possibility that these Int waves could be waves 1, 2 and currently in 3 to much lower levels.
    OEW is just a manipulated tool that you use very ably to fit your preconceived bias of the market but it is clearly a method that has proven time and time again its inefficacy.

    • Bill Manscoe says:

      Who died an appointed you god. You really offered a plethora of your own original ideas. You will be very easy to ignore on any further posting.

    • tony caldaro says:

      You obviously have not read the weekend updates

      • Philippe V says:

        I read all your updates Tony and except for the last sentence which states my opinion, I am still allowed to sate my opinion I guess even if it is contrarian to the majority, all the rest is purely factual.
        Instead of dodging the issue why don’t to try to explain why is the SPX one downtrend and the R2K or the TRAN for example, are a 3 trends combo downtrend/uptrend/downtrend ? And can you in all honesty refute the fact that you have been trying to catch up with the downtrend Augustine your lower targets weeks after weeks ?
        A little honesty and acknowledgment of your mistakes would be welcome for once.

        • mcgcapital says:

          Phillipe, OEW has proprietary trend confirmations, you’d have to do the course to understand how they’re derived because it isn’t clear why, as you’ve said, that SPX 2603-2815 isn’t an uptrend but the Rut one is just from eyeballing it on the charts. But Tony gives most of his input for free so if he chooses to keep a few things back we can’t complain.

          Also, as things stand there is no mistake to acknowledge. He’s said all along that it would drop 15-20% for Major 2 and thus far that’s what it’s done. I agree with you that it goes lower and that the count probably changes but we aren’t at that point yet. In addition, whilst the targets he had were higher pivots, he’s never once declared this downtrend to be over. So anybody who’s following closely shouldn’t have been caught out by being long. And it’s unfair to say that he expected way higher at the highs because he didn’t, he thought there wasn’t much left in it and he switched bearish on the day 2800s broke down.

          It was the same in 2016. The rally off the lows was supposed to be major B, and it just kept going to new all time highs. But the operative word was uptrend.. if you’d followed that, you’d have been long from 1810 to at least 1965 (the 50% retracement), and would have only lost money trying to short after that point, which if you used proper risk management it wouldn’t have been too bad.

          I can’t take much value from the long term trend calls because if we go down significantly more here that’s only 1/3 that have been right since 2016, so I can understand why people criticise. But then again, if people think they can come here because Tony can always predict these things then they’re wrong because nobody can. Whenever anyone makes a market call, they’re always making a prediction on both earnings and valuation, because price is just a function of the two. By definition, such things are uncertain and unpredictable, and it depends on external future events for which we can only speculate on outcomes.

          The value here is in the tidbits of information shared, the technical analysis, the historical comparisons, and the community of different traders who post a variety of ideas here. You need to pick out which parts add value for you and ignore the rest

        • xEVAx says:

          I think they are on slightly different timing and I think the DOW, NYSE, are in a wave 4 flat…. The NDX and SPX and maybe RUT (I don’t follow) are in a Zig Zag for 4 and they will all be in better alignment when we make the next low .)

          When you can give two updates a week with pivots that work like Tony’s and manage 17 pages of excellent charts I might take you seriously….. How about posting a chart with an alternative view before critiquing our gracious host???

    • 123 abc says:

      Philippe V:

      On the 28-SEP-2018, Tony posted the following NASDAQ chart which nailed the top within 90 points…

      At which point, Tony stated an expectation of a short-lived and mild bear market declining around 20% in the major US indices lasting several months into next year.

      Three months later, the market is still sticking to this call like gum under a shoe. You can’t better this for fee or free.

    • lunker1 says:

      Philippe you haven’t paid attention. Tony called for 3000+ (got 2941) and then he called for a 15-20% bear market (2353-2500) got 2347

      Read October 13

      “We are now expecting a shallow 15% to 20% bear market lasting several months into next year. Bear markets are often quite volatile.”

      https://caldaro.wordpress.com/2018/10/13/weekend-update-673/

    • elmer510 says:

      From the early start Tony talked about 15-20% decline and gave one more exact number: SPX 2400. The first seem to be very good, and the second just a bit too optimistic.

      I think the honorable gentleman Philippe V is mixing temporary declines with the final ones cause 2675, 2656, 2632, etc were never meant to be the final targets, only temporary ‘under way’ levels. Its obvious Tony’s prediction for a Major 2 decline was much deeper than that.
      So far I must say the only problemtaic factor has been about the possible Intermediate wave B which was difficult to judge this time, but possibly is finished already.

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