Weekend update

REVIEW

The market started the holiday shortened week at SPX 2671. Tuesday started with a China-US related gap down opening to SPX 2654. The decline continued until it hit SPX 2617 in the last hour of trading and then rebounded into the close. Wednesday a gap up opening to SPX 2653 was sold off to SPX 2613 by noon. Then the market rebounded again into the close. Thursday a quiet open led to a slightly higher close. Then on Friday the market gapped up to SPX 2661 on reports the FED may be halting Quantitative Tightening. Then the market hit SPX 2672 before settling the week at SPX 2665. For the week the SPX/DOW was mixed, and the NDX/NAZ gained 0.05%. Econ0mic reports for the week were sparse, as most were delayed due to the government shutdown. Two downticks: existing home sales and leading indicators. One uptick: weekly jobless claims improved. Next weeks reports are plentiful, highlighted by the FOMC meeting, Q4 GDP (est. +2.6%), and monthly Payrolls. Best to your week! ECRI ticked up again this week. Low was -6.5% two weeks ago.

LONG TERM: 60% uptrend probability

Over the past several months we had been reporting the deterioration in the foreign markets as the US markets continued to climb. Then after the US markets topped and joined the foreign indices we noticed a potential shift in late-December. The foreign indices that led the bear market declines appeared to be in their last downtrends of their bear market. This week we report that Australia, Hong Kong, Singapore, and S. Korea all appear to have bottomed, and are now in their first confirmed uptrend of a new bull market. Canada joins this list as well, and Brazil continues to make new bull market highs.

No change in the US markets. After a 2009 super cycle low the market advanced for six years into a Primary I bull market high in 2015. A Primary II bear market followed into early 2016. Then Major wave 1 of Primary III bull advanced from February 2016 to October 2018. This was followed by a bear market into a late-December low at SPX 2347. If that was the low, an Intermediate wave I of Primary III bull market is now underway. If not, we expect a retest of that late-December low then an Intermediate wave I bull market to commence. In either case the bear market is either over or close to being over.

MEDIUM TERM: 80% uptrend probability

As noted in previous reports, we have been tracking five criteria to help in determining that the bottom is in, or a retest is next. The five criteria: 1. the length of this advance, 2. the SPX/DOW short term wave structure, 3. the NDX/NAZ wave structure, 4. the strength of the rebound in percentage terms, and 5. the strength of the rally in market breadth.

As previously noted. The advance is the longest since the bear market began – a positive. The NDX/NAZ wave pattern for this rally looks impulsive – a positive. The strength of the rally in percentage terms has exceeded the levels for a B wave – a positive. The SPX/DOW wave pattern still looks corrective – a negative. The market breadth has not yet exceeded potential B wave levels – a negative. Overall there is a 60% probability that the bear market has bottomed. A separate and reliable source, has breadth data from the year 1932. They suggest there is an 11% probability of a retest, a 22% probability we’re still in a bear market, and a 66% probability that the bear market bottom is in.

On Wednesday we noted some price parameters based upon the markets action this week. We currently see three waves up in the SPX. If at any time the SPX drops below to 2615 then that could be the 4th wave providing: 1. the market then rallies above 2675 and 2. the market does not drop below 2520 first. The former would suggest a five wave sequence higher, the later a three wave rally and retest of the lows. In either case it looks like the SPX will confirm a medium term uptrend this week.

SHORT TERM

Over the past several weeks we have been tracking this rally from SPX 2347. At first it looked a bit choppy, then five waves were completed at SPX 2520. Then the market did go into chop mode which ended at SPX 2444. We’ve labeled that high and low as waves i and ii.

Since then the market did several choppy waves up, then spurted higher in a good rally to SPX 2675. This week the market sold off early in the week hitting SPX 2617, then SPX 2613, before rallying into week’s end. This is how we are quantitatively counting this uptrend’s short term waves. This count will fail if the market drops below SPX 2598. A member of our group offered a slight alternate to this on Friday should it fail.

Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum ended the week overbought. Best to your trading FOMC week!

FOREIGN MARKETS

Asian markets were mostly higher and gained 1.0%.

European markets were mostly higher and gained 0.9%.

The DJ World index gained 0.4%, and the NYSE lost 0.2%.

COMMODITIES

Bonds continue to uptrend and gained 0.3%.

Crude continues to uptrend but lost 0.7%.

Gold remains in an uptrend and gained 1.2%.

Bitcoin appears to be starting an uptrend but lost 1.5%.

The USD remains in a downtrend and lost 0.6%.

NEXT WEEK

Tuesday: Case-Shiller, consumer confidence. Wednesday: Q4 GDP (est. +2.6%), the ADP, pending home sales, and the FOMC meeting concludes with a press conference. Thursday: weekly jobless claims, personal income/spending, and the Chicago PMI. Friday: monthly payrolls, ISM, construction spending, consumer sentiment, and monthly auto sales. Best to your week!

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

About tony caldaro

Investor
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586 Responses to Weekend update

  1. torehund says:

    Lee get your Lincoln Continental 1973 ready for driving season ( 8,5 miles per gallon ), we need a wave 2 bottom for crude right here 🙂

  2. johnnymagicmoney says:

    The FED will not raise this year
    Corporate profits are solid
    A trade deal will be done
    China is fine because they are stimulating
    Price is going up so it will keep going up
    I could go one but I’m sure you sense my sarcasm

  3. Dex T says:

    Bitcoin is a crap currency.

    I already have USD, why should I convert them to bitcoin to buy stuff?

    Can anyone provide an answer?

    • Anonymity.
      (like when you buy things/software/VPN/fake IDs/etc. online across continents. I guess you can buy them stateside also, but if not too far, you can just exchange greenbacks)

  4. vipulm555 says:

    Made 30k today itself

  5. mcgcapital says:

    This has been like watching paint dry for the last 10 days or so. Everyone waiting for the Fed meeting to be dovish. But in reality it’s dovish because fundamentals are bad. Once tomorrow’s trade meeting concludes then February will be very interesting.. we can see whether there are buyers at these levels

  6. Dex T says:

    So interest rate of 2.25 is the best that the U.S. economy can take?

    Fed has to hold the hand of wall street again?

    • purplember says:

      Dex it will be very interesting how FED handles a recession in future. can’t raise rates now or unwind a 4 trillion balance sheet with good economy.

      • Dex T says:

        They will likely miss the recession once again. It’s anyone’s guess.

        If it hits then it seems unlikely that rolling back a few increases would change anything.

        Sad to think that the 0.25% rate increase in Dec was the final line in a major bear market

  7. Jim B. says:

    I think the fed is being super friendly because they know that Mueller is going to release his fake charges against Trump soon.

  8. im not sure people realize that bitcoins supply is pretty much ran its course…..17.2mil bitcoins had been mined….there are only 3.8mil left to be mined in total over the course of the next 120 years….this means the cost of mining is gonna grow exponentially and the supply will be minuscule against growing demand….

    • Dex T says:

      Bitcoin has little value outside of a trading instrument or some global commerce.

      For the vast majority of people and businesses what is the point of buying an electronic “currency” run by some “exchange” when each country has it’s own to use?

      It was a modern day case of tulip mania gone mad. Even at these prices it is absurdly high.

      • its digital cash of the future(hard currency will be phased out eventually)….like gold its indestructible….and it has utility

        and its not run by any exchange…..it seems like u r regurgitating the cliches without actually knowing anything about the subject

        • Dex T says:

          Hard currency isn’t going to be phased out anytime in the next 10 years, guaranteed! There are far too many people using it and there are no plans by the Treasury to do so anytime soon.

          and there is zero reason that the U.S. govt. would use bitcoin since they have no control over it. If the U.S were to move to such a system the Govt. would issue it’s own version of an electronic currency.

          Bitcoins are back by each individual “exchange”- which is just a few guys in an office or apartment building somewhere. They have little regulation or supervision and have been numerous cases of fraud

          • bro….i dont want to argue over stupidity…..u dont like it then dont buy bitcoin

            • Dex T says:

              I definitely won’t be buying it because I have no use for it.

              I can walk into any store or business (or shop online) and get what I want with U.S. dollars. Why would I convert my USD to bitcoin??? It makes no sense!

              you can’t argue because you have no answers and neither does anyone else in the bitcoin community. They keep parroting the slogans of “currency of the future”, but why does anyone need another currency??

        • and by hard currency i meant to say cash

        • Dex T says:

          you’re the one “regurigitating clichés” “currency” of the future

          Bitcoin isn’t back by any official govt. Just private individuals .

          It was mainly used early on by drug dealers and others enaging in illegal activity to disguise their activities.

          it was hyped massively into a bubble that popped in 2017 and lots of people are looking to recreate the bubble

          • i said cash of the future…..its backed by free market

            u sound like a dumb child with zero critical thinking and a lot of cliche spoon feeding….if u dont understand economics then refer to my chart below where it speaks in baby language….

            • Dex T says:

              How far in the future are you talking about??? It’s already been around for 10 years. How much longer do we have to wait??

              Like I said, the U.S. govt issues their own currency, so why should they adopt bitcoin (or litecoin or any of the other’s) when they can simply create their own.

              Venzuela already did this and adopted their own version of a cryptocurrency (not that’s it done them any good)

              I saw your chart and it shows what? You said that EW had nothing to do with it so what?

  9. purplember says:

    on daily chart, i’m showing neg div and Adv/dec weaker as we reached new high

  10. elmer510 says:

    A good rally now. SPX above 2680.
    Question is whether this is wave iii or v ?

  11. vipulm555 says:

    Full throttle 3200 my June
    5k by 2021

    Loaded new bull !!!!!

  12. lunker1 says:

    As a wise man named Tony once said, most triangles resolve themselves into ABC’s

    Weekly Pivot 2650
    Weekly R1 2687
    Weekly R2 2710
    Weekly R3 2747
    Monthly R1 2756

Comments are closed.