Weekend Report

Weekend Report

Provided by the OEW Group

August 10 2019

SPX started out the week with a large gap down and continued lower till late afternoon, to make the low of the week at 2822, before a brief rally to finish Monday down at 2845.  Last week’s close was 2932.  Tuesday gapped down again and retested within a few points off the low in the first 20 minutes of trading, then made a strong rally for the rest of the day with only one small pullback along the way, to finish higher at 2884.  Thursday gapped higher and continued to rally straight up with no pullbacks to finish the day just off the high at 2938.   Friday opened lower and continued down to 2900 by noon, then reversed course and rallied back to close the week at 2919.  A consecutive week of volatility!

For the week, SPX/DOW lost 0.46%/0.034% while NDX/NAZ lost 0.60%/0.56%.

On the economic front, Crude Oil Inventories, Consumer Credit and MBA Mortgage Application Index increased, while ISM non-Manufacturing Index decreased.  JOLTS were little changed.

Next week economic news comes from the Treasury Budget, CPI, Core CPI and Import Prices.

LONG TERM: Uptrend

spxwkly

In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009.  The Primary wave I high occurred in May 2015 and Primary wave II low in February 2016.  Primary wave III has been underway ever since.  Major wave 1 high of Primary wave III 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 and Minute waves.  Despite the recent volatility and calls by some for the end of this bull market, we see no evidence yet to suggest these subdivisions are anything more than typical medium term downtrends in context of an overall bull market profile.  We will update the long term status, if/when anything develops to change this view.

MEDIUM TERM: Downtrend

spxdaily

SPX opened lower for the second week in a row and accelerated down, but seemed to find a near term bottom on Monday at 2822.  This gives 200+ points so far for this Minute wave ii downtrend that we believe has been underway since mid-July at the 3018 early top.  Although it’s exceeded the typical 5% decline mentioned last week, the 6.5% decline so far is still within the norm for this bull market.  SPX retested the low on Wednesday for an apparent double bottom, then rallied back above the 50% retracement zone, but ran into resistance there.  Consequently, we updated our medium term status to reflect a potential Minute wave ii bottom with the possibility of another retest before it’s complete.  A rally above 2950 or so will further confirm the Minute wave ii bottom.  If SPX breaks lower, then we will revaluate.

Some in our group pointed out a possible correlation of this downtrend with prior declines triggered by Tariff Man Tweets (TMT).  We’ve had three occurrences of these tariff threats since December and each time the market sold off in the 200+ point range.  We’ve annotated the medium term chart to show this effect.  The May selloff bottomed after a 200+ point decline.  The Dec selloff paused at 200+ points, but then continued lower after Fed autopilot comments (PAP on chart), which likely contributed to that extension.

SPX followed the DOW profile from last week and got extremely oversold at the low, the most so since Major wave 2 last December.  We will be watching the short term waves for direction of the pending rally.  Although we still expect Minor wave 3 to exceed the 3300 level, our medium target for Minute wave iii will be updated after it becomes clear that a new uptrend is underway.

Medium term, RSI is in the neutral zone and MACD is turning back up.  DOW generated a positive divergence off the low on Wednesday.

SHORT TERM

spxhourly

SPX gapped down and blew right through our support targets mentioned last week to reach beyond the 61.8% retrace level of Minute wave i, but was able to close above that level at 2845.  From there, SPX rallied to fill the gap and close the week back above the 38.2% retrace level at 2919.  We noticed a pattern developing this week based on our qualified small waves and short term tracking techniques, so we adjusted the count accordingly.  We continue to track the irregular Minute wave ii previously discussed, but have rescaled the count to reflect a double three pattern.  That gives an irregular zig-zag for Micro wave a, [3018]-2973-3028-2958, followed by Micro wave b single wave rally to 3014.  Micro wave c then suggests a potentially complete zig-zag pattern at the low [3014]-2914-2944-2822.  We can also make a case for an elongated flat into the higher low at 2826, but either one suggests a completed double three pattern from the Minute wave i top.  From there, we can count two waves up from the failed bottom, [2826]-2939-2900, with a potential third wave still developing.  There’s still a possibility of another retest of the low as shown with the optional ii/a label on the chart.  We’re waiting to see if this rally can impulse or is going to fade into another b-wave.

Short term support is at the 2884 and 2858 pivots.  Resistance is at 2929 and 2957 pivots.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) lost 2.07%.

European markets (using FEZ as a proxy) lost 0.36%.

The DJ World index lost 0.90%, and the NYSE lost 0.71%.

COMMODITIES

Bonds are in an uptrend and gained 0.64%

Crude oil is in a downtrend and lost 2.08%

Gold is in an uptrend and gained 3.50%

GBTC is in a downtrend and gained 0.20%.

The USD is in an uptrend and lost 0.11%.

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

 

Have a good week!

 

 

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444 Responses to Weekend Report

  1. torehund says:

    If its an a-x-c it could top at 2985, if c equals a.

    Like

  2. Any NEWS out this morning about Tariffs?
    Anyone know why the S&P is + 60 ?

    Anyone know?

    Liked by 1 person

    • SPYtrader says:

      Blue, were you positioned long in the ES before the news?
      Who cares what the news is, the key is being in the correct position when the so called news comes out.

      Liked by 2 people

      • phil1247 says:

        phil1247 says:
        August 12, 2019 at 12:47 pm
        agree
        i can wait for 3 of 3 of c straight up to buy
        >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
        SPY ….

        if he read my post from almost 24 hours ago
        he wouldnt have to waste time
        sniffing around for news eh ????

        Liked by 2 people

        • maxcherry12 says:

          apparently some of us get the news early
          maxcherry12 says:
          August 12, 2019 at 3:41 pm
          i still think spx takes out the june low but before it does it might want to take out a few put buyers

          phil1247 says:
          August 12, 2019 at 4:07 pm
          agree max
          this is exactly what i am talking about

          maxcherry12 says:
          August 12, 2019 at 4:12 pm
          a lot of puts at 290 strike, cant let them go to expiration in the money now can we

          Liked by 2 people

        • SPYtrader says:

          Exactly. Every day there is news for Bulls and news for Bears. I prefer a solid technical approach instead of waiting for the news.

          Liked by 2 people

        • I’m sorry Phil, but since you have admitted to not having an ES account open for trading…. I must admit that I don’t bother reading your posts.

          I fail to see how calling every intra-day “squiggle” makes anyone any money without having a futures account open.

          It’s really as simple as that.

          Liked by 2 people

        • torehund says:

          In the world as of today, no news is good news 🙂

          Liked by 2 people

  3. Apparently someone was asking what the NEWS was for yesterday’s lower opening.

    I guess they missed the NEWS about ARGENTINA and the Merval Index collapsing 48%.

    https://www.bloomberg.com/news/articles/2019-08-12/markets-set-to-sell-off-in-argentina-after-macri-loses-primary?cmpid=BBD081219_CUS&utm_medium=email&utm_source=newsletter&utm_term=190812&utm_campaign=closeamericas

    Credit default swaps are now pricing in a 75% chance of default over the next 5 years.
    And dollar denominated bonds lost roughly 25% yesterday.
    Yields on mature notes soared past 35%

    No big deal.

    Liked by 1 person

  4. phil1247 says:

    as described previously

    SPX
    a = c 2986
    1.618 X a is 3063
    still looking for 3 of 3 of wave c straight up

    either this pop is wave 1 of c or all of wave c up

    Liked by 1 person

  5. fionamargaret says:

    TVIX
    TLT up to 181….10 yr yield down to 1.25
    $SPX down to 2137.76,,,,1800
    UUP ($US) up to 36
    EUO (short euro) 28.084 up through….think the euro may crash
    GLD up to 189….UGLD up to 200

    Liked by 1 person

    • fionamargaret says:

      …maybe “straight up” is just the idle rumination of days gone by…
      …think the Fed and the Government are quickly becoming impotent…takes two parties to make an agreement…

      Liked by 2 people

    • fionamargaret says:

      2500 Shanghai, 10000 Nifty, 330 Euro Stoxx 600, 6600 Ftse are all natural levels of correction.
      I think we go lower to 2137.76.
      Carter Worth says down to retest the December lows (2340)

      Looking back to similar bull moves (this time from 3/4/2009 which is 3805 days) corrections ranged from 21.5% to 86%.

      This time we created disorder by breaking supply chains…so maybe it is different this time.

      Like

  6. lml25 says:

    By jove they’ve done it again.PPT will do anything to keep Avi from being right…lol.Trump blinks–another delay.Would seem to put a floor under tech.Later.

    Like

    • lml25 says:

      Of course,the negative event for tech stocks that’s looming is…what does Trump do about Google,Facebook,Twitter etc in the free speech battle?Something is supposed to be coming from the DOJ at some point.Stocks better not turn around and sell off on today’s news or you know what that means.

      Like

  7. iamnotviv says:

    Haha, dead cat bounce on Tariffs being delayed. Loading up on shorts!

    Liked by 1 person

  8. torehund says:

    $Ssec could turn here, if so that could floor the Spx downturn too 🙂

    Liked by 1 person

  9. mcgcapital says:

    US inflation ticking up… could lead to a worst of both worlds for stock markets with higher rates and weak growth. Good job that news doesn’t move markets and that fundamentals don’t matter… otherwise I’d be worried about being long!

    Liked by 2 people

    • lunker1 says:

      Rearview mirror. Gas is very cheap now. Same with coal and natural gas. I would expect inflation to cool off in August since transportation of people and goods is much cheaper.

      Like

    • Yup MCG.

      There was no news about Argentina Sunday Night and no news about tariffs out of the Trump Administration this morning. No news whatsoever to account for these dramatic moves in the market.

      🙂

      Like

    • swamper1 says:

      Mark, the long term trend is still up. You’ve already missed 600 SPX points, do you really want to miss another 300-400 pts to the upside?
      Instead of spewing nonsense, best you do your homework.

      Like

      • mcgcapital says:

        You yanks are sell centred uneducated idiots for the most part.. open your eyes boys, and look beyond SPX, which in itself is showing major signs of weakness anyway. You guys are the ones spewing nonsense, check out most equity markets, the bond markets, commodities.. everything is showing you the same story. But I guess because you have limited understanding, you have no problem swallowing this wave 3 up nonsense

        Like

        • phil1247 says:

          popular delusions and the madness of crowds …

          those who came to mock…………..
          remained to speculate

          mark

          until you turn to a buyer again like you did at the last peak
          bulls have little to worry about

          Liked by 1 person

          • mcgcapital says:

            I was pretty much the only one telling people to sell the rally the day after the fed.. at least write factual things. You just talk a good game but you’re all over the place unless it goes up in a straight line i.e. the only conditions in which chasing momentum works!

            Like

        • swamper1 says:

          Please let us know when you start buying at the 3200-3300 level. It shall be coined as “the fade of the year” for most of us. Btw, are you reading the long term charts upside down?

          Like

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