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. Twosidedtape1 says:

    Seeing most likely scenario as Friday beginning minor b of Intermediate B. No idea how low it goes, maybe SPX 2460. Minor c to 2550-2600 or so. 15 minute chart oversold (maybe indicating start of b of minor b now?) so should get some indication Monday where it’s headed. Pattern at the moment looks too simple to me to be the end of the bear already.

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  2. Trader Sal says:

    I have a feeling that we top out at ES 2612. Then drop all the way down to 2052ish. But we need the double blitz of balance sheet reduction and rate hike roadmap from Powell. You know.. to prevent weimar republic from happening all over or modern day venezuela where loaf of bread costs an arm and a leg. Who cares what stock mkt is at if currency is worthless.

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    • What would cause or prevent “weimar republic” in the US?

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      • fenster6 says:

        Having a fed chief who doesn’t bend with the wind. FOr money to have value there must be some degree of scarcity and a CB which doesn’t JUST print away recklessly.

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        • xEVAx says:

          How about it’s an engineered take down so TPTB can get out, the FEDS know the math can’t be fudged and twisted anymore, the REAL scenario they see is there aren’t enough chairs and life boats…. China knows too of course, Eurozone looks screwed to me, USA USA!!!!

          How about USD, YEN, Euro all done??? I think whats really happening with “trade” involves the process of negotiating the death of all three in all but name and a commodity backed $$$ replacement…. Yea that would be another “conspiracy theory” turned fact….

          I got lots of em LOL, anyone remember the “Amero”??? Maybe Trump brings ALL the troops home from Europe, Aisa, CLOSES the markets, declares martial law and we take over Canada LOL… New “manifest destiny” involves “Freedom” and liberation for Venezuela (Oily and we already know how to refine it)…. Oh yes and with the martial law comes military tribunals for 75% of the US government, LOCK HER UP =)

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  3. budfoxi says:

    For me, the Bear market in the SPX ended in 1982. Looking like we may never experience a Bear market again. Bud

    ________________________________

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  4. jobjas says:

    Thanks Tony for the weekend update.
    Continue to have SPX in wave 4 of the bull market from 2009 low.
    Wave 4 has almost achieved 38% correction of wave 3 [wave 3 was 261% of wave 1]
    but wave wise only A of wave 4 (A/4)
    Expect A/4 to bottom around 2300 followed by a strong bounce for B/4
    followed by a drop back to 2200 area to complete W4
    W5 then should take SPX to a minimum of 3200 .
    That completes 5 waves from 2009 . That also completes two larger waves
    1) wave 5 from 1974 AND 2) wave 4 from 1932

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  5. purplember says:

    thanks Tony for the update. this market will make “me” feel smart 1 minute and an idiot the next lol

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  6. Michael Wiseman says:

    On the Daily SPX chart. What does the Red “TMT” and the Green “SCT” mean? TY.

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  7. M1 says:

    DAX completing a bear market ? 🤔🤔
    Did I miss something Tony ?

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  8. phil1247 says:

    thanks tony

    38 specials

    selloffs have been coming from the 38 % retracements which is exactly what i would expect in a 3rd wave down

    when the retracements come higher up to the 50 and 618 levels this tells you that
    sellers are losing their mojo

    we are still in a series up until 2412 is broken
    only then would it be possible to reach the 2241 wave v target

    2375 is the 50 % retrace of 1810 to ATH
    and is likely to be a battleground on retest

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    • phil1247 says:

      weekly chart for larger perspective

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    • excuzgt says:

      Phil, just wondering how are you coming up with 2412 being line in the sand to separate bull from the bear.

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      • phil1247 says:

        hi ex
        its the .618 retrace from the low to the current high
        this is how you are going to identify the low when it comes

        the low is already in if 2412 does not break

        ew is nice but could that be 5 waves up already ?
        or is it corrective abc and lower lows ahead ?

        i dont want to guess
        so thats why i use DH method

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        • csonkabull39 says:

          5 wave ending diagonal? If it is, the low at 2346 will be exceeded sometime before Friday.

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        • excuzgt says:

          Thanks. Appreciate the explanation, Phil. Do you mind educating this not so learned soul on what DH method is and if there is some place where i can read up on it.

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          • aahmichael says:

            A word of warning. Please do your due diligence on the DH method before you risk a penny, because according to Phil, the self proclaimed DH master on this blog, the DH method said there was “no doubt” that SPX would go to 3042 and beyond, and insisted that it was still a bull market until 2532 was taken out, which means that it didn’t turn bearish until after the market had already declined 13.91%. Would you have wanted to have stayed long while the market fell 410 points?

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          • phil1247 says:

            absolutely none of that is correct
            are you really that dense
            that you cant understand what i have written?

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          • phil1247 says:

            aahmichael says:
            December 28, 2018 at 2:35 pm
            Geezus, how dense can one person be that you can’t comprehend

            >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

            take a look at the man in the mirror einstein

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          • aahmichael says:

            Anyone who watched you frequently post the chart “everyone loves to hate” throughout the year knows that everything I said is 100% true. When the chart finally crashed and burned, you then said that you had been posting it “for entertainment purposes only.”

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          • phil1247 says:

            you are absolutely wrong again
            and have proven once again you will never understand how DH works
            i gave up on you long ago
            and will not discuss it any further with you
            there will be no more replies to your nonsense

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          • aah….take it easy, may I respectfully suggest that you think 2X before you post. You don’t know how all the intricacies of the DH method of trading this particular algorithm….so how can you knock someone (phil…an expert) for giving his analysis based in part, of this algorithm? BTW, mcg is correct, it’s not DH’s algorithm. He studied one particular algorithm and over the years he has studied the pattern of trading and refined it. For lack of a better term is commonly known as the DH method.

            1. phil is 100% correct in that call…he did have a caveat, which you failed to mention or read. phil has consistently said….many times in the past and may not have said it, in recent posts but it’s understood as common knowledge that,….”as long as /ES continues to defends the 61.8% measured moves LONG of that particular set-up,…the target is 3034″ and he is 100% correct…end case, close discussion.

            2. DH has said that 3034 was the target of this particular measured move LONG…as long as the 61.8% of that measured move long defends. The way this algorithm trades is yes /ES can continue to trade higher and higher even print new all time highs….WITH THAT 1 CAVEAT “…. THE 61.8% OF THAT MEASURED MOVE LONG HAS TO DEFEND” iF IT BREAKS, THAT SET-UP IS INVALIDATED. End case, closed discussion.

            Hope this post clarifies the DH method and phils calls.

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          • fotis2 says:

            Have to agree with Aah what he just said is 100% facts

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          • phil1247 says:

            thank you asa

            very excellent explanation of how it works

            but i have explained this to him many times before
            i refuse to do it any more

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          • aahmichael says:

            Actually, I understand the DH method inside and out. He just ripped off the fib trading that Joe DiNapoli was doing in the 1980s, and added the word “algo” for marketing purposes, in order to convince trading neophytes that he had made a new discovery, which uncovered the secret to the market. Nothing you said in your 1st and 2nd points contradicts what I said. The DH method continued to call the market bullish until 2532 was taken out. That means it was on the wrong side of a 13.91% decline.

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          • phil1247 says:

            asa

            last request on this topic of DH
            please dont get into it with A H michael
            you will NEVER win an argument with him
            you will just be wasting your time

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