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. argento77 says:

    Time to be long!!

    A

    Like

  2. Was there any “news” out today?
    I think I saw something about the 2 year / 10 year yield INVERTING for the first time since 2007. 😀

    Liked by 1 person

    • SPYtrader says:

      I posted the foxbusiness article this morning for all the potus haters to get giddy about a recession.

      Liked by 1 person

      • As I have long been predicting, the GDP is gonna have a “1” in front of it and that’s exactly what Goldman said earlier this week, which (perhaps) prompted the Trump Administration to take back the additional tariffs set to go into effect on September 1st.

        They now say it was done to not impact the Xmas Retail Shopping period, but that’s total BS because its not like they didn’t know this 14 days ago.

        Meanwhile, my recommendation (yesterday) of AMRN looks pretty solid.

        Bought AMRN last Thursday in after-hours at 13.70 when the stock tanked on an FDA AdCom Meeting requirement. Rallied as high as $15.43 the next day. Was one of the few stocks up today. +3.7% at $14.82

        Have a nice Weekend everybody!
        🙂

        Liked by 1 person

  3. Frank Gaggia, Jr. says:

    IMHO too much pessimism now for the market to top. Yes, we’ve had a helluva run since 2009, but no “blow-off” top on massive volume. Markets “climb a wall of worry” and end with euphoria, not pessimism. I’m looking to dump all my puts at SPX 2790-2800 and re-evaluate.

    Like

  4. Shared this analogy on Monday, and it is still tracking pretty well:

    https://imgur.com/66AlE9d
    Updated here:
    https://imgur.com/3Co4tDC
    (source: @BohnetCh)

    Trade safe folks!

    Liked by 1 person

    • Edward Disney says:

      Thank you for sharing. I am trying to picture the entire wave 4,but it looks like a huge running flat.

      Like

      • Correct. 4th waves are the least predictable of all five waves part of an impulsive move, and a running flat is pretty typical 4th wave behavior.

        Analogies/fractals can remain for a long time, but often at some point disappear again. So we’ll track and monitor it until it doesn’t work anymore.

        Like

  5. phil1247 says:

    a stick save at 38 es
    will have you looking near 3000 again

    Liked by 2 people

  6. fotis2 says:

    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.

    Like

  7. H D says:

    OEW group, pretty volatile to be 1-2’s. You’re suggesting to your readers the markets are about to be in 3 of 3 of 3 up. Always the most dangerous count. Tony used to at least carry an alt count on 1 index. When did that stop?

    Liked by 1 person

    • torehund says:

      https://www.investing.com/indices/us-spx-500-futures

      could be an x-wave from 07/08 until about now on the 5H chart after the wave up. And the x-wave could function as a w-2 bottom here. Nasty count but its feasible 🙂
      No trading recommendation as always.

      Like

      • H D says:

        Hey tore- X waves were Tony’s favorite. Ultimately that’s just a variation of another 3 of 3 up count though. alt? they almost have an 11 year old bull market distributed and a larger retrace is on deck. 3-4’s happening.

        Liked by 1 person

    • maxcherry12 says:

      i see it as an expanding flat
      may high was 1
      june low a
      late july b
      now in a c down
      according to EWI expanding flats are more common than zig-zags

      Like

    • H D, I’ve constantly pointed this flaw out. Any Elliott wave analyst always provides an alternative count, because the markets always -at any time frame- has different options available because it is probabilistic in nature. Not presenting an alternate count is hubris as it implies one knows with all certainty what the market will do next. But there are no certainties in the markets, only probabilities. As an (O)EWer one tracks the preferred count -highest probability- until disproved. The beauty of Elliot wave is that with the alternate count one has if/then scenarios when price levels get invalidated. Applying this to one’s analyzes greatly enhances the power of one’s work and understanding of the markets. OEW is not excused from this, quite the contrary. Yes, it can quantify a wave, but it is still up to the analyst to then give it a wave-degree and label. There’s no objective method to do the latter. Adding wave-degree and wave-label to a quantified wave is the of course subject to the analyst’s expertise, skills, level of understanding of Elliott Wave, etc.

      So let’s say a new five waves up has been quantified from when a low was struck. Great, but one does then not know if that is wave-a of a larger counter trend a,b,c correction (5-3-5) or if that is the start of a new impulse -1,2,3,4,5- higher (5-3-5-3-5). Thus one MUST label that wave initially as “a/i” until one or the other is disproved. THAT is intellectually honest Elliot waving.

      Trade safe!

      Liked by 1 person

      • H D says:

        I’m not sure were on the same page about all that. Tony used to keep a alt count on the RUT or NYA at these inflection points. Now it looks like just add 1-2’s.

        Liked by 1 person

        • H D, yes Tony used to do that. But the current group unfortunately doesn’t… Tony understood this “probabilities” principle obviously well. The current group apparently does not, or else they would present it indeed on say the RUT or NYA as you pointed out.

          Note, however, the RUT and NYA are btw and most likely in much different counts than the SPX, DJIA and NAS. Especially since both two have not made new ATHs since last year… This is also something one needs to recognize and work with.

          And providing alternate counts is not a way of trying to weasel one out of a wrong call based on the preferred count, as many often think (not saying you do 😉 ). Quite the contrary. Presenting alternate counts shows a (more) thorough understanding of the markets being stochastic, probabilistic and non-linear in nature.They are NOT meant to say “see I was right anyway”.

          Like

          • H D says:

            well, just to clarify- I’m not mad about it just curious when they stopped. I’m glad they’re keeping Tony’s work going. RUT would be one to look at for sure.

            Like

  8. Frank Gaggia, Jr. says:

    A few more SPX observations: neg cross on daily 13/34 ema last week, weekly break below MBB…LBB now about 2790, weekly MACD un-embedded this week.

    Like

  9. Frank Gaggia, Jr. says:

    Tried to warn yesterday that it looked like negative D to me, even though it didn’t meet the usual criteria. I’ve just seen it too many times over the last 40+ years! Sometimes the eye is better than the “rule”. Also, I’ve been noting for several weeks now that it didn’t “look right” that the weekly RSI never reached oversold. Maybe this time???

    Like

  10. bounce now or drop to 2800

    Like

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