Weekend update

REVIEW

This volatile week started at SPX 2486. After a gap up opening Monday and rally to SPX 2509, the market went into chop mode ahead of the NY Day holiday. A gap down open started the action on Wednesday. After hitting SPX 2467 early the market rallied to SPX 2519. Thursday had another gap down opening. The market quickly dropped to SPX 2448, rallied to 2488, then dropped to 2444 just before the close. Friday a totally different story. After a gap up opening to SPX 2482 the market just kept on rising, hitting SPX 2538 before closing at SPX 2532. For the week the SPX/DOW gained 1.75%, and the NDX/NAZ gained 2.25%. Economic reports for the week were light and mixed. On the downtick: ISM manufacturing, plus both jobless claims and the unemployment rate rose. On the uptick: the ADP, monthly payrolls, and auto sales. Next week’s reports will be highlighted by the FOMC minutes, the CPI, and ISM services. Best to your week!

LONG TERM: downtrend probable

After the worse December since the year 1931 many of the market pundits capitulated and turned bearish. The SPX lost 9.2% on the month. It is probably best to describe 2018 as a bull sandwich: two three month corrections, with a six month uptrend in the middle. Net loss YoY 6.2%. Economically, the ECRI was making lower lows this week.

Last weekend we noted that just when many were turning bearish several foreign markets looked like they were in the last bear market downtrends: China, Germany, Hong Kong, Singapore, S. Korea, and Spain. This week China made a new bear market low, Hong Kong confirmed its last downtrend, S. Korea confirmed its last downtrend and made a new bear market low. S. Korea looks like it could be bottoming now.

An emerging market that is enjoying the fruits of its economic and political recovery is going mostly unnoticed. It just made new bull market highs in the first three days of this new year. The market: Brazil. After a market crash, along with nearly every other market, in 2008, the BVSP rose in a P1 bull market until 2010. Then economic/political trouble set in and a six year P2 bear market followed until the worldwide low in 2016. It has been rising in a P3 every since. Short term charts are on page 5 of the stock charts link below.

Nothing has changed on the long term count or the weekly chart. You can read last weekends update for more detail.

MEDIUM TERM: downtrend

Made some notes on the daily chart to prove a point. For those that think the POTUS and FED cannot move markets, think again. Note the four instances in December when the POTUS or FED did something market noteworthy. December 4th, Trumps tariff man morning tweet. The market was at SPX 2786. By December 26th the market had dropped to SPX 2347: -15.8%. Along the way Powell stated that rates and QT were on auto pilot during the rate hike pressor on December 19th. If you recall the SPX dropped 100 points between the time the FED raised rates and he finished his pressor one hour later. On December 24th the Presidents Working Group convened. Then on Christmas day, December 25th, Trump tweeted stocks are cheap. The SPX had closed at 2351 on the 24th, and has since rallied 8.0% at Friday’s high. Clearly Powell and Trump can move markets.

With the best surge in market breadth since the downtrend began it is possible Int. A ended at SPX 2347 and Int. B is currently underway. A 38.2% to 61.8% retracement would be normal for a B wave of this degree: SPX 2574 to 2714. It’s a large range but nothing this volatile market couldn’t handle in a couple of days.

We also see the possibility, as noted in the DOW charts, that Int. C is still underway. This was detailed in last weekends update. Either way we should be seeing a retest of the December lows before this bear market ends.

SHORT TERM

The pattern for this downtrend remains the same. An abc down to late October, a November B wave, then another abc down to late December. While the pattern has been unchanged, the wave degree has been a bit difficult to determine. Ideally, as noted last week, a drop to SPX 2310 would ideally fit the SPX and DOW.

Short term support is at the 2525 and 2479 pivots, with resistance at the 2575 and 2594 pivots. Short term momentum ended the week overbought. Best to your trading in the NY.

FOREIGN MARKETS

Asian markets were mostly lower and lost 0.8%.

European markets were all higher and gained 2.1%.

The DJ World index gained 1.5%, and the NYSE gained 2.2%.

COMMODITIES

Bonds continue to uptrend and gained 0.6%.

Crude appears to be trying to get an uptrend going and gained 5.8%.

Gold remains in an uptrend and gained 0.2%.

The USD is in a downtrend and lost 0.2%.

NEXT WEEK

Monday: ISM services and factory orders at 10am. Tuesday: consumer credit. Wednesday: the FOMC minutes. Thursday: weekly jobless claims and wholesale inventories. Friday: the CPI and the Budget deficit. Best to your week!

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

About tony caldaro

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

759 Responses to Weekend update

  1. J.Wenger says:

    Thanks Tony. I agree with the opinion that SPX needs to retest the low before shaking off the downtrend. But who knows when that will happen.

    Maybe a drastic reduction in political essays in the comment section will signal our exit from the 4th turning?
    https://www.invest-safely.com/stock-market-outlook-2019-01-06.html

    Like

  2. Ponder 🤔 Russia has already created military school for blacks only. It’s secret military school that even Russians younger generation says is to deploy these mini killer robots here in USA! Who knows..

    https://abc7news.com/technology/uc-berkeley-professor-helps-create-viral-video-to-warn-about-killer-robots/2664980/

    Like

    • fionamargaret says:

      Now the numbers….2785, 2598, 2450, 2340, 2215, 2087 was my original format….
      I still have $SPX down to 1851, but shorter term, more clarity is needed
      $WTIC still suggests 34, but shorter term more clarity is needed.
      DIA down to 181, SPY down to 193
      TLT up to 143….TMF up to 28.5……
      GLD down to 950….SLV down to 11
      $BVSP up to 10,9999…….

      “Ever tried, ever failed.
      No matter.
      Try again, fail again, fail better.”…….Samuel Beckett

      Like

  3. gtoptions says:

    Charge up your old Palm Treo, the iPhone is Dead Again!
    AAPL ~ https://www.tradingview.com/x/Z3jk0Jei/

    Like

  4. AN OPEN LETTER TO THE PEOPLE ON OF THIS BLOG:
    We are at an ugly time in this country right now. Now, of course, half the people in the country and this blog (I dare say this blog is simply a reflection of the country) are pro-Trump and the other half are, let’s just say for the sake of it, pro-Obama. While I vehemently disagree with the “pro-Obama folks”, we have got to stop this if we are going to survive as a country. If I get specific about what I just stated and start name calling, we are just going to jump in the mud hole again. Let’s not.

    I accept responsibility for what I’ve posted in the past. As a general rule (but not always), I simply respond to those with which I strongly disagree. I have to do better. You have to do better. I have learned a whole lot from this blog, as I read just about every post. Honestly, I come here simply to learn. But I am passionate, just as you are (I’m quite sure). I respond to what I view as an injustice or a wrong. It is how I’m built. I’m sure that you do the same.

    Tony Caldaro has graciously created and operated this blog for all of us. He has asked us to stop commenting on politics. Now, this is very difficult because quite often the political world intersects with the financial. But can we try a bit harder and rise above the rest of world? I have used the term “civil war” several times. I don’t like doing that. But you have to be almost insane to see that we are headed to a very dark place if we don’t try to get along better. This country was built on compromise. There was a period when we forgot how to compromise. It was from 1861 to 1865. About 750,000 people died. For goodness sakes, let’s not go back there ever again. If we don’t compromise with each other, both here and as a country, we will not survive. That is a fact.

    Let me single out one person, for example: aahmichael Obviously, we disagree on a whole lot. I have been harsh on you in political arguments and you have as well. I apologize for that. You are a very smart person and I take very seriously what you have to say, as well as most others on this board. Can we keep our political opinions, as Tony has repeatedly asked to ourselves? I will if you will. No one can take away our strong personal opinions, but let’s tone it down some, if for no other reason…..to respect the request of the person who owns and operates this blog. That goes for everyone else who I personally and politically disagree with.

    Thank you all for listening. I hope you have a wonderful and blessed day!

    Like

    • ttsden says:

      TW . Much appreciate your eulogy. I salute you.
      Yesterday I rec’d a vid on whats app by Marco Rubio . He made an impassioned speech on Why & How to make America Great Again. I was amazed Rubio has transformed – he is s a Trumphite, even sounded like POTUS – the only sitting President who is not a politician . Because DJ TRUMP is a Statesman. I predict that politicians are a dying breed, and good riddance to them .

      Like

    • Nice post, and the sign of a standup guy.

      And I certainly believe that aahMichael is quite a standup guy as well, in his own way.

      Even if he doesn’t respond to you, I am certain he is also trying to be better at posting on this blog, if nothing more than to be a better TA professional. And that is the only reason he started posing here to begin with.

      Like

    • lml25 says:

      The two sides are passionate,even fanatical about what’s happening in the country because there are two paths we can travel.The US,for 200+ years was 90-95% white..It was founded by white,Christian Europeans who thought a certain way.Go ahead to today and certain groups,including ,Communist sympathizing types,minorities,Muslims (who want to take over the world,as they always have)and illegals are banding together to replace whites,through demographic replacement and immigration.If that happens,I see the consortium I mentioned,try to eliminate whites through severe violence.They would be afraid of whites fighting back.Some can see it,some can’t,some don’t want to.Not only here but Europe.It’s a disaster in the making.Happy Sunday.

      Like

      • aahmichael says:

        That is such total nonsense. This country has never been a Christian nation, and it’s never been a white nation. It has always been a nation of immigrants, built by immigrants. With the exception of those of pure Native American descent, nobody is “from here.” The fact that right-wing conservative Christian white supremacists are scared to death because they are dwindling in number is their own problem.

        Like

        • Very true Michael.

          It’s amazing how racists are able to completely dismiss that this nation has always been a nation of immigrants.

          Never mind that 40% of the CEO’s in Silicon Valley are immigrants. Never mind that the percentage of “white” Americans back in 1790 was 80.7% and that number is currently around 72.4% per the 2010 census.

          If any “white” guy from Michigan, Ohio, Pennsylvania, or West Virginia is tired of being unemployed or working for minimum wage of $8.55 – $9.55 an hour … you can come out to California where the weather is a helluva lot better and pick strawberries for $16 an hour in Watsonville … just 32 miles from Apple Computer headquarters. 🙂

          Like

          • It’s not the productive work that’s the problem, it’s all the free stuff (SS, Medicaid, local school budgets, etc) that’s the problem. Of course, NONE OF THE FREE STUFF existed when this country was a country of European immigrants.

            By the way, the man who comes over to service my rough mower (Lastec 3696), now has a rare strain of pneumonia. The MDs, are searching for a treatment. They think he got it from the many golf courses he services. (Lastec machines are made for golf courses).
            Many of the grounds workers there are illegal immigrants.
            Illegal immigrants do not need health checks to enter the country.
            Did you not know that, or do you just not care about that?

            Fortunately, I have no symptoms… So far.

            Like

          • nsteve24 says:

            SS is not free stuff!! every American workers pays for SS through payroll deductions their entire lives, except the wealthy who do not pay into SS on a majority of their income.

            Like

          • I’m only saying it’s free stuff for folks who pay nothing or almost nothing into it.
            Illegals can collect SS (disability), as well as children (minors) of deceased or disabled workers

            Like

          • Tom, since when is Social Security FREE?
            It’s clearly earned.

            And for what it’s worth, “In God We Trust” was the result of a 1955 Congressional vote to place the motto on all U.S. money.

            It was a move by our Govt as part of the cultural war during the Cold War on godless Communism. I’m surprised that you are unaware of this.

            You seem to operate from a very poor knowledge base…. one that develops a narrative that is not based in facts… in order to support your bias/opinion.

            Like

          • As I said to aahMichael
            In God We Trust
            It doesn’t say
            In Allah We Trust
            or anything else.
            And, as you have noted Mr. bluehorseshow, it’s up-to-date.
            1955.
            This is a Christian country.
            And thank you for helping out the rest of the posters here who are somehow uninformed.

            Like

          • aahmichael says:

            Geezus. Now it all makes sense why you are a Trump supporter. The phrase “In God We Trust” doesn’t show that the US is a Christian country. It shows that the primary language in the US is English. “Allah” is nothing more than the Arabic word for God. “Dieu” is the French word for God. “Dios” is the Spanish word for God. Hebrew has many different words for God, but none of them are “God.” Etc. Etc.

            Like

        • On Jeez, I never should have said anything.
          No good deed goes unpunished.

          Like

        • This country has never been a Christian nation

          Michael, the country was originally settled by Christian fanatics, the Puritans.
          They had to flee UK, because they didn’t want to practice at the Church of England.
          So they fled to Holland, and then to North America.

          You shouldn’t upload these kinds of posts.
          You make yourself look foolish.

          Like

          • aahmichael says:

            Perhaps you should read more carefully. I said that this country has never been a Christian nation. I didn’t say that there have never been Christians in this country.

            Like

          • Perhaps you should read more carefully
            The money says: “In God We Trust
            Michael, I am trying to help. Please listen to me.

            Like

          • aahmichael says:

            Are you serious? Those words were first put on paper currency in 1957, and the words don’t say whose version or definition of God it’s referring to.

            In contrast, can you name a single governing principle of the United States that is based on Christianity? Where are the rights of “life, liberty and the pursuit of happiness” found in the New Testament? Where are separation of powers, rights of the accused, and the rights of people to govern themselves found in the New Testament? Where is Jesus (or even “God” or “Creator”) ever mentioned anywhere in the Constitution? Where is “loving your neighbor as yourself” ever mentioned in the Constitution?

            In the New Testament, Paul said that the authority of government comes from God. (The American Revolution would have never happened had those people followed the teachings of Christianity.) However, in America, it’s just the opposite. The authority of government comes from the People, not God. That is a concept that derives from the philosophy called “secular humanism” that is so reviled by the Religious Right. The United States of America owes far more to the French humanist philosophers of the mid-1700s (Montesquieu, Voltaire, Diderot, Rousseau, d’Alembert, d’Holbach and Condorcet, etc.) than to Christianity.

            Like

          • Micheal, you are going totally circular.

            First you are complaining that when the Puritans fled Europe (because they were fleeing religious persecution), but they weren’t really Christian.

            But then these Puritans created social foundations which coalesced into a secular government in the Colonies. And that’s a problem, because that American Government didn’t codify Theocratic principles like the ones that they fled from in Europe?

            And this new concept they incorporated is now famously known as”Separation of Church and State“, most scholars consider to be a major achievement in historic humanistic terms.

            And you seem to be wondering (or complaining) “Why did they do that??

            I really don’t think this kind of discussion needs to be on Tony’s website.

            Like

        • gtoptions says:

          ” “nobody is “from here.” ” 🧐 Huh!

          Like

        • lml25 says:

          Not white?Go on YouTube and download TV game shows from the 60s and 70s.The audience is 99% white.Every ethnic group has some organization in their corner–except whites.In fact,there are liberal whites who actually talk disparingingly of whites–“old white men should leave the planet” etc.Because why?
          Anyways,I’m not racist-I’m anti-globalist.But anyone who’s white should worry about becoming the next Mayan disappearing act.The Democrats/Communists have something up their sleeves–and it wont be pleasant,I’m afraid,Aah,even for you.

          Like

      • And then there are those of us who weren’t that dumb or gullible and never believed that Trump wanted to “Drain the Swamp” or that Mexico would pay for the Wall.

        🙂

        Like

        • nsteve24 says:

          American soybean sales to China were down 94% in 2018 from 2017.
          Meanwhile, China nearly tripled purchases from Russia. This is what winning looks like in Trump’s Russia First presidency.
          American farmers who voted for Trump were conned good. MAGA, LOL

          Like

          • M Wags says:

            And now those Farmers are getting screwed by the Govt. Shut Down, since the USDA is closed and cant calculate crop yields so that Farmers can get their subsudies.

            Talk about Buyer’s remorse.

            Go Trump Goooooo!

            😀

            Like

      • mcgcapital says:

        There’s an immigration problem in Europe but it’s more to do with the sheer number of people.. lack of space, not enough school places, hospitals, housing etc to cope. It’s nothing to do with race or religion. Some immigration is needed because of the western world’s demographics. Europe for the most part is secular.. religion of any kind doesn’t make sense now we have easy access to cold hard facts. It obviously doesn’t exist

        The US has only ever been 90-95% white if you count all of the black people as slaves (I.e. it never has been). People need to stop being so tribal and thinking in terms of us vs them, it’s small minded. Whenever I come across discussion about American politics I have to laugh because it’s basically two groups of ill informed people accusing each other of making up lies. It’s amusing from the outside

        Like

    • tony caldaro says:

      just read about 20 posts and half were about politics (=

      Like

    • chrisk44342 says:

      Nicely said, but pointless, as evidenced by his racist rant below. He can’t control himself.

      Like

  5. bouraq says:

    Chart of the day is #NASDAQ

    Like

  6. lml25 says:

    A couple things I read and reviewed.Armstrong says “Monday will be a panic day.”He doesn’t know if its up or down though.
    Ira says 2613(100 week ma) is resistance–above that goes to 2728ish(18 week).Still a downtrend at that point.
    That’s all folks.

    Like

  7. Either his is a c wave of wave 4 or a B wave up. To me max upside is the downward trend line, currently around 2600. Will see, but be very surprised if we surpass 2573. More likely 2550-2564 area. Good luck all

    Like

  8. Than you Tony and Happy New Year. My thoughts this week:

    Like

  9. phil1247 says:

    MARCH futures

    mark….

    straight up above 2507….
    a push thru 2572
    will have me looking for a bear pic
    in a flaming taxi
    going off a cliff 😉

    Like

    • mcgcapital says:

      We’ll see, can see it carrying on popping up too but not for long… still far too many people refusing to accept what’s going on. I expect when it’s all over that the perma bulls will all he gone their losses will be so bad

      Like

      • chrisk44342 says:

        The mantra of the last 8 years. trade what you see

        Like

        • tony caldaro says:

          absolutely agree

          Like

        • chrisk44342 says:

          Not picking on your Mcg. You said you were younger- this is where experience counts if you speculate. You ‘think’ or ‘believe’ something should happen based on your perception of fundamentals or some combination of fundamentals and TA, and that will approach will only lead you down the path of heartache my friend. You/we/all of us simply are not good enough to assess the macro economic tea leaves and determine what is going to happen. Can’t be done. Is the market making higher highs/higher lows? Utilize a method of trading that limits risk and pays off reward in multiples. It’s not as sexy as picking a high or low in the market but it works in fits and starts. Picking the high or low- not so much 🙂

          Like

          • mcgcapital says:

            It’s true that I haven’t been trading that long time wise… I started in 2011, basically knew a lot about theoretical finance from my degree and from working in the city between 2009-2016, but had no idea about the intricate details of trading. Obviously that was a recipe for disaster… I was long only at the start and didn’t manage the risk well, got wiped out during the summer sell off. I didn’t start making consistent money until 2013 (which funnily enough coincided with having a proper stop loss strategy and money management) then stepped it up through 2014. 2015-2018 I’ve done really well (enough to quit work and give up investment bank bonuses), and last year was standout. Obviously its a lot easier when there’s volatility… 2017 was the toughest year for accumulating points by far out of any them.

            Every trade I place is based on technical things and not fundamentals. I’m mainly a day trader, and try and trade both sides of the tape. I find that if I don’t and only focus on one side, it leads to bias where you can only see the market moving in one direction. You have to focus on technicals when trading as its the only way to manage your risk… some macro hedge funds obviously go with their fundamental view but it leads to huge volatility of returns, which is not something any of us smaller traders can do easily and still be profitable. But I’m strongly of the view that markets are driven by fundamentals and not technicals, as that’s what 95% of the capital in the market is looking at.

            Having worked in that environment for 60-70 hours a week for 8 years, I know thats all that fund managers focus on. They rarely care about technicals, and if they were to try and look at them they’d take one look at TA and say sorry I can’t use that its just unpredictable and doesn’t work. Which is true if you’re using it to predict things, it’s use is in defining risk on smaller timeframes. So bottom line is, if you get the fundamental narrative right, you likely predict where the market is going. That’s not easy to do, but I’ve done ok at it, and still learning all of the time. I basically have my opinion on fundamentals, which it was basically my job to do when in banking.. but I want to see them marry up with the price action otherwise they’re wrong. So far I’ve been dead on with most of the fundamentals over the last year and I’m yet to see price do anything to suggest I’m wrong on them.

            There’s certain things I’m looking for to suggest I’m wrong on the big bear view but none of them have occurred yet. I guess some people would prefer to focus solely on technicals and never think once about the fundamentals, but I do find that side of things really interesting. When someone posts ‘yeah we know that’s a problem and it has been for years, its never affected the market before so I just ignore it’ when talking about demographics, the budget deficit, the amount of debt… I do tend to think that we’re at a tipping point on many of these overriding structural issues so when we look back at this period in 10-20 years its going to live long in the memory. Cycles and fundamentals matter a lot.

            Like

          • mcgcapital says:

            And to be clear, these issues have been a problem in the background for a decade or more. When the economy is growing they don’t matter, but when a recession comes the maths is a problem. That’s why when the market is going up and all of the data is good, they can be put to the back of your mind… some people have been saying it for years but its not useful to think that way. But when the market cycle turns which appears to be the case, these issues need serious attention

            Like

Comments are closed.