Provided by the OEW Group
July 06, 2019
This holiday shortened week opened with a large gap up to SPX 2971 on Monday, hit 2978 within the first hour then began to sell off. After lunch the SPX had dropped to 2952 but that was to become the low for the week. On Tuesday 2970 became resistance early on producing a pullback to 2956 but from there the SPX moved on up and hit 2996 at the early close on Wednesday. With Thursday being a holiday, Happy 4th to all, Friday saw a gap down to open at 2984 and continued to sell off into 2968. A rally then started into 2994 before a 2990 close.
For the week, SPX/DOW gained 1.65%/1.21% while NDX/NAZ gained 2.22%/1.94%.
The economic news had positive reports for ISM Manufacturing PMI and Non Farm Payrolls, while ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI were all negative.
Next week economic news comes from Core CPI, Core PPI, FED Minutes and the FED Monetary Policy Report.
LONG TERM: Uptrend
In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009. The Primary I high occurred in May 2015 and Primary II low in February 2016. Major wave 1 high occurred in October 2018 and Major wave 2 low in December 2018. Intermediate wave i of Major 3 is now underway and is subdividing into Minor waves.
MEDIUM TERM: Uptrend
This week started off with a large gap up at the open on Monday and proceeded to rally to a new all-time high of 2996 by the holiday shortened close on Wednesday. Nice way to celebrate the 4th of July and honor our beloved maestro’s birthday, we miss you Tony! There was no change to that status post-holiday, as Friday gapped down at the open, but recovered to fill most of the gap and finish just 6 points off the high by the end of the week. The NAZ and NDX joined the party and confirmed new uptrends, which now puts all our market in alignment. This extends the Minor wave 3 rally to 267 points from the Minor wave 2 low at 2729. It’s been a persistent rally, 22 days without a medium term subdivision, which is right up there equal to the longest such duration since the Major wave 2 low last December. This suggests some caution is advised, since a significant pullback could come at any time. First logical target for Minor wave 3 completion remains at the 3300 level.
Using our short term tracking, we can now count five waves up from the Minor wave 2 low >2911>2875>2964>2913>2996, which sets up a nice impulsive structure for the beginning of Minor 3. We continue to track this as a potential Minute wave i of Minor wave 3, that’s subdividing into five Micro waves. Micro wave 5 has been underway since last week’s low at 2913 and is either at or near completion at the high this week of 2996. The upper limit for this count remains at 3002, since Micro wave 3 can’t be the smallest wave for this structure. The market ran into resistance at our next pivot and setup a slight negative RSI divergence at Wednesday’s high. Risk is now elevated for a sizable decline in the near term. However, extension beyond 3002 suggests our alternate count may be in play, which is a more bullish Nano wave subdivision. Once Minute wave i completes, we would expect the largest pullback since the trend began.
Short term support is at the 2984 and 2957 pivots. Resistance is at the 2995 and 3032 pivots. Short term and medium term RSI both have negative divergences.
Asian markets (using AAXJ as a proxy) gained 0.13%.
European markets (using FEZ as a proxy) gained 0.55%.
The DJ World index gained 1.21%, and the NYSE gained 1.24%.
Bonds are in an uptrend and gained 0.23%
Crude oil is in a downtrend and lost 1.46%
Gold is in an uptrend and lost 1.46%
GBTC is in an uptrend and lost 3.04%.
The USD is in a downtrend and gained 1.28%.
Have a good week!