Weekend Report

Weekend Report

Provided by the OEW Group

August 17 2019

SPX started out the week with a gap down (same as last week) and continued lower for the rest of the day to close 9 points off Monday’s low at 2882.  Last week’s close was 2919.  Tuesday rallied sharply to the high of the week at 2943 within the first hour of trading, but then pulled back and traded in a range to finish the day at 2926. Wednesday gapped down big at the open, as the bond market reacted forcefully, apparently to the turmoil in Hong Kong.  Within the first 10 minutes, SPX retraced the entire Tuesday rally, then proceed to decline for the rest of the day and close on the low at 2840.  Thursday saw continued weakness as SPX declined to the low of the week at 2826 in the afternoon, followed by a rally back to 2855 before closing the day at 2845.  Friday finally gapped up and rallied to a high of 2891 just before noon, then leveled off within a few points for the rest of the day to close the week at 2889.  A third consecutive week of volatility!

For the week, SPX/DOW lost 1.03%/1.53% while NDX/NAZ lost 0.60%/0.55%.

On the economic front, CPI, Core CPI, Import Prices, and the Treasury Budget deficit all increased.  Our Weekly Leading Indicator is down slightly from last week but holding firm at 49.5%.

Next week economic news comes from Existing Home Sales and Initial Claims.

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.

As mentioned last week, we haven’t yet seen any evidence on the long term charts to suggest anything more than a typical medium term downtrend in context of an ongoing bull market.  However, the move in bonds this week pushed 3o year rates to new lows, prompting an additional subdivision and extension of our long term cycle low originally established by Tony back in 2016 (updated chart below).

tyxmonthly

This caused some concern and generated much discussion within the group.  The general consensus was that even though tariffs may be a contributing factor, the root cause of such a shift is most likely based on worries over economic risk in Asia due to the Hong Kong protests and potential for recession in Europe.  Nevertheless, it’s just not showing up broadly in the US markets yet.  We discussed several options for alternate counts with more bearish outcomes and concluded that the probabilities are too low at this time to warrant adding these into the mix.  We will continue to monitor and adjust our outlook on these alternates as more data comes in.

Currently we have all four of our core US markets and most US sectors in confirmed bull markets and trading not far from the highs.  While RUT and TRAN are notable outliers, these indices have been in bear markets since December and have been struggling to regain their footing.  It’s not unusual for TRAN to deviate from DOW like this, it happened exactly the same way back in 2012 coming off a deep 20% correction in 2011.  One of our members has suggested that RUT in particular may be more susceptible than most to the bond rally due to higher weighing in rate sensitive shares.  Still there’s historical precedence for these kinds of sideways moves as RUT moves in corrective structures whether in bull or bear mode.  Consequently, we don’t consider these deviations either out of the norm or cause for concern.  The bottom line here again is, there’s just not enough OEW evidence in the few sectors that are underperforming to change our long term outlook.

MEDIUM TERM: Downtrend

spxdaily

SPX opened lower for the third week in a row, rallied back on Tuesday to find resistance at the medium term EMA’s, then accelerated down from there to find support right at last week’s higher low of 2826.  This is now the second test of the low established last week at 2922 and sets up a potentially completed pattern for Minute wave ii, with Micro wave a = 2822, Micro wave b = 2943 and Micro wave c = 2826. The 200+ point 6.5% decline mentioned last week is still intact.  Although, the rally off the low is substantial, it’s still within range of countertrend moves in context of the existing downtrend.  Consequently, caution is advised for a possible extension lower.  Some in our group have noted that strength in NAZ and NDX may be a bullish indicator, since these are making higher lows relative to DOW and SPX.  It’s possible, but could also be a case of the glass half full, since these may still have work to do on the downside.  There’s just not enough evidence yet to mark the bottom for this downtrend.  A SPX rally back above 2930 or so will further build confidence for the Minute wave ii bottom.  However, a break below 2822 will signal Micro wave c is subdividing and brings into play alternate counts.  We will report on those if/when price dictates.  We’re still waiting till it becomes clear that a new uptrend is underway before updating our targets for Minute wave iii.

Medium term, RSI ended the week neutral and MACD is yet again trying to turn back up.  DOW continues to show positive divergence based on the low this week.

SHORT TERM

spxhourly

SPX was never able to impulse higher off of last week’s rally, but instead failed at the 2943 high on Tuesday, after a corrective sequence of overlapping waves up from 2822, then collapsed to retest prior lows at 2826.  This now suggests the irregular zig-zag pattern reported last week becomes our preferred count for Micro wave a, followed by an overlapping five wave structure for Micro wave b.  Micro wave c is either underway with two small waves so far or completed as a failed flat at 2826.  As mentioned in the previous section, the wave status at this juncture is unclear, so further waves are needed to sort it out.  As always, we’re looking for an impulsive structure to develop using our short term techniques to help solidify a potential bottom.  We can count one 68 point wave up to 2894 based on Friday’s rally, but so far, it’s inconclusive.  If the market reverses lower, that will suggest the possibility of double three pattern and potential extension for Minute wave ii.  Not much more to report until further price action clears up the near term picture.

Short term support is at the 2884 and 2858 pivots.  Resistance is at 2929 and 2957 pivots.  SPX is still holding within the same support and resistance levels as last week.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 0.33%.

European markets (using FEZ as a proxy) lost 1.48%.

The DJ World index lost 1.28%, and the NYSE lost 1.32%.

COMMODITIES

Bonds are in an uptrend and gained 1.04%

Crude oil is in a downtrend and gained 0.57%

Gold is in an uptrend and gained 1.00%

GBTC is in a downtrend and lost 11.35%.

The USD is in an uptrend and gained 0.70%.

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

 

Have a good week!

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457 Responses to Weekend Report

  1. torehund says:

    Beware, bots are eating, short duration 2 or ?

    Like

  2. fionamargaret says:

    TVIX had a reversal higher….
    $SPX down to 2137.76….flush…??
    TLT up to 181
    GLD up to 193
    EUO (short euro) up
    UUP up to 36
    Scroll back to yesterday for individual stocks outlook

    Liked by 1 person

  3. cj32 says:

    Cr. to CBZ

    Like

  4. This should have no impact on the markets at all, since the FED is irrelevant.

    https://www.bloomberg.com/news/articles/2019-08-22/fed-s-george-says-u-s-economy-doesn-t-need-lower-interest-rates?cmpid=BBD082319_OUS&utm_medium=email&utm_source=newsletter&utm_term=190823&utm_campaign=openamericas

    KC Fed Chief Esther George says “its not time yet” for more action.
    “I’m not ready, to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker.”

    Philly (Harker) and Boston (Rosengren) presidents also see economy as stable and voiced opposition to additional cuts.

    Dallas Fed President (Kaplan) also sounded hesitant about cutting at the next Fed meeting.

    Like

    • lunker1 says:

      Do you ever make any market calls, wave counts, charts with TA or anything possibly useful…….or do you just post news like you’re the only one that finds news and critique other people’s posts with snarky comments all day?

      Liked by 1 person

      • Congratulations!
        You just described your post content here perfectly Lunker!

        80% of your posts are spent defending a 70 year old man named Phil who doesn’t even have an ES account.

        15% of your posts are snarky comments.

        5% on the market.

        Liked by 1 person

        • 1.) I posted an NYA A/D chart yesterday.

          2.) The day before that I posted the CBOE Put/Call ratio.

          3.) Yesterday morning, I posted a market “call” based on trend following funds having to rebalance due to CONVEXITY hedging of mortgages and variable annuities. Convexity hedging was estimated by quants at JPM to have totaled roughly $90 million per basis point move in bond yields at the end of last month.

          I see no charts or market calls here posted by Lunker.
          Your typical post looks like this:

          “Oh Mark you Internet bully. You’re so tough behind that keyboard your boyfriend must love it.”

          Lunker1 – – – August 21, 2019 at 4:54 pm

          Like

        • swamper1 says:

          I’d like to respond, but not sure who to address. Is it you dung? or is it lml25? or another one of your imaginary friends like iamnotviv?
          Bunch of freaking kook’s. All 3 of you should have your heads examined.

          Like

      • riderbobo says:

        His posting news is a new development. As far as the former is concerned the short answer is no.

        As far as the narcissistic personality I have nothing to add.

        Liked by 2 people

      • maxcherry12 says:

        bluehorseshow is an agitation a daneric droll
        has nearly a dozen screen names
        lmfao, what ever happened to p3, to name a few
        you post something here, he copies it then posts mocking comments about it at danerics he just did it to me checking my speling (really? something a 8 yr old would do ) he’s done it to phil to you, lunker and others
        he’s gone so far as mocking someone whose mother died of cancer
        i don’t post here much so it doesn’t make much difference to me, he’s blocked from your site which was a good move,
        I’ve know him for 10 years he mocks everyone’s, trade, funny thing is in the 10 years he’s never had a correct call on the SPX and recently he claims bond yields were in P3 up (april 25 2018 2.927% ) well we know what happened since (1.554%)
        he’ll destroy this blog like he did danerics , I’ll make a prediction after he reads this he’ll ask for screen shots of acct’s and trades

        Liked by 3 people

  5. phil1247 says:

    ES 2893 should hold if bulls are still in charge ( 38 SPECIAL )

    Like

  6. lml25 says:

    More non-news events moving the market (China tariffs etc)

    Liked by 3 people

    • aahmichael says:

      What was interesting about today’s announcement was that it was pre-announced on Twitter prior to the official announcement. This guy is the unofficial mouthpiece for the Chinese government. A must follow.

      Liked by 2 people

    • Yup, the futures barely budged. 😀
      lol

      Liked by 1 person

  7. phil1247 says:

    exited short at 2903 es just now
    waiting for open when i can put in a stop for next play

    Like

  8. argento77 says:

    Careful longs..US indexes need to close the gap first before we breakout up…could be a very swift move lower or gap down!

    A

    Liked by 2 people

    • lunker1 says:

      a French Canuck living in ManchVegas.
      you know he’s good!

      Like

      • swamper1 says:

        hey lunk, don’t be too quick. many large union construction firms and pension trustees use their forecast. i have a few more years to go before i start my pension and as of last quarter we are 86% funded, which ain’t bad at all. so, they must be doing something right.

        Like

        • phil1247 says:

          some apparently would believe you are talking to yourself here …..

          Like

          • riderbobo says:

            No problem, blue does it all the time, even on Christmas Day.

            Like

          • lml25 says:

            Close enough.Never saw them on the same page before,now back to back posts…lol.If I didn’t know better…anyways we wait for JHole tomorrow.Nothing changed for me today S&P or DJT-wise,so I felt I didn’t need to repeat myself like others do ad nauseum.
            G’ night all.

            Like

          • swamper1 says:

            Phil, those that may think that are just as brain dead as bluehorsedung and lml25.
            Couple of damn misfits if you ask me.

            Liked by 2 people

Comments are closed.