Weekend Report

Weekend Report

Provided by the OEW Group

September 21 2019

SPX opened the week with a gap down and traded to 2991 by noon, before rallying back to close Monday 9 points off last weeks close at 2998.  Tuesday opened flat and traded in a narrow range all day until a rally in the last half hour to finish the day just one point off last weeks close at 3006.   Wednesday opened down and traded lower into the Fed announcement to cut rates by 25 bps with the new target range at 1.75 to 2.00%, then proceeded to make the low of the week at 2979 by 3pm, before reversing and rallying back to last weeks close at 3007.  Thursday opened with a gap higher and rallied up just above last week’s high at 3022 by noon, then faded for the rest of the day to finish unchanged.  Friday opened higher but peaked in the first half hour of trade at 3016, then sold off sharply in the afternoon to retest the low at 2985 before recovering to finish the week at 2992.

For the week, SPX/DOW lost 0.51%/1.05% while NDX/NAZ lost 0.88%/0.72%.

On the economic front, Industrial Production, Capacity Utilization, Housing Starts, Building Permits, Existing Home Sales and Crude Inventories were all higher.  The ECRI weekly growth indictor moved up again to -1.46%.

LONG TERM: Uptrend may be weakening

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 and the Major wave 1 high of Primary wave III occurred in October 2018.  We continue to track our alternate count on DOW in the public chart list.  Our preferred long term count remains on SPX, as Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor and Minute waves.

Even though this is a very bullish long term outlook, we maintain the current status that the uptrend may be weakening.  Major wave 3 subdivisions have yet to breakout of an overlapping structure, while the bond market remains in turmoil with negative rates, yield inversion and now this week’s Fed intervention to mitigate spikes in short term rates.  We reported previously about the negative OEW consequences of the yield inversion which gave us the alternate count.  Until Major wave 3 can clearly breakout, we remain cautious long term with the possibility that Major wave 2 could extend and retest the December low.

MEDIUM TERM: Uptrend

spxdaily

SPX traded down this week into the Fed rate decision and made the low of the week at 2979 after the announcement.  From there, SPX recovered to reach a high of 3022 by Thursday noon, but couldn’t hold that level and proceeded to retest the low on Friday, before finishing the week down at 2992.  This price action was sufficient to generate additional medium term subdivisions, such that we can now count three waves up from the Minute wave ii low established last month, followed by a subdividing fourth wave.  As suggested last week, we got the 42 point pullback that was anticipated, but its appearance this early in the sequence creates a dilemma with the wave count.  The scale of the three waves up so far is uncertain pending further price action.  For now, we’re counting the structure as Micro wave 1 = 2940, Micro wave 2 = 2892, Micro wave 3 = 3021 and Micro wave 4 subdividing with a retest of the weekly low still in play.  This structure requires a large fifth wave in order to achieve the logical target for Minute wave iii.  Otherwise, a small fifth suggests the count will need to be rescaled to Micro wave 1 for the entire sequence off the August low.  The other possibility would be a Micro wave 3 subdivision, but there’s no way to know without additional price action.  Main thing now is the uptrend continues to show impulse structure.

A clarification on price targets may be helpful, as some of our members noted confusion in numbers previously reported.  The overall price structure for Minute wave i and ii project the 3300 level as our initial target for Minute wave iii.  This is taken from the 1.618x ratio with the first wave.  In order to achieve that target given the current subdivision, it would require one of the Micro waves up to exceed the same extension ratio of 1.618x.  Currently, that ratio for the potential Micro wave 5 would suggest limited upside to just under 3200.

SHORT TERM

spxhourly

There’s not much to add for the short term discussion since the medium term and short term waves are currently tracking close to one another.  In addition to the three waves up mentioned in the previous section, we’re counting Micro wave 4 as an irregular pattern, Nano wave a = 2979, Nano wave b = 3022 and Nano wave c in progress with potential to extend below 2979.  This count will be invalidated if the pullback is deep enough to overlap Micro wave 1 at 2940.  The 32 point “small wave subdivision” reported last week was negated by our short term techniques as Micro wave 3 was qualified by price action this week.  This caused Micro wave 3 to fall short of the 3080 target and now sets up one of the other scenarios mentioned in the previous section for Micro wave 5.

Short term support is at the 2984 and 2957 pivots.  Resistance is at the 2995 and 3033 pivots.  Short term RSI ended the week oversold.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) lost 2.06%.

European markets (using FEZ as a proxy) lost 0.33%.

The DJ World index lost 0.33%, and the NYSE lost 0.23%.

COMMODITIES

Bonds are in a downtrend and gained 1.07%

Crude oil is in an uptrend and gained 5.91%

Gold is in an uptrend and gained 1.04%

GBTC is in a downtrend and lost 1.51%.

The USD is in an uptrend and gained 0.31%.

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

 

Have a good week!

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422 Responses to Weekend Report

  1. shmeiso says:

    Thx. nice work.

    Liked by 1 person

  2. M Wags says:

    Thank You.

    Liked by 1 person

  3. Thanks Christine …. My thoughts:

    Like

  4. Page says:

    Thanks Christine & OEW group.

    Liked by 1 person

  5. Tim Waters says:

    Any opinions on the significance of this regarding stated objectives through Oct 10th by the Fed?https://www.zerohedge.com/markets/these-are-banks-where-feds-14-trillion-reserves-are-parked

    Like

  6. OEW Group & Christine:
    Always appreciate these updates and the road map of your expected scenario! I sometimes fail to thank you, but I am a loyal reader.

    Liked by 3 people

  7. 123 abc says:

    Thank you Christine & OEW group for the excellent market analysis.

    SPX : Preference is to consider the entire sequence off the August low rescaled as Micro-1 wave, labelled as follows…

    BTC

    Liked by 5 people

  8. wahlyelim says:

    Dear Christine,
    Agree to your post wholeheartedly without reservation.
    I shall reinterate that ” Nobody Is The God Of Trading Or Investing” which is a zero sum game which there are Bulls and Bears. We just need to make our own judgemental call as to mkt directions. Whether right or wrong is not an issue but we shall learn to improve and enhance our market direction skills.
    Weekly, I always look forward to reading OEW posts
    and forever grateful to Tony’s good works and with you, Christine for continuing your father’s legacy.
    As such, no point for anyone of us, bloggers to post unnecessary comments about other bloggers markets analysis.

    Liked by 6 people

  9. torehund says:

    Autumn lulls to end here and now 🙂 $Gtx looks ripe for the big upheawal, as do the $Ssec.
    Thanks Christine/Oew-team for your dedication to the blog, and not to forget; all other contributors.

    Liked by 4 people

  10. Christine Caldaro says:

    I would like everyone who are constantly bickering to cool their jets this week. Post your charts and your ideas don’t argue with each other. If you have something constructive to say go for it. If it’s a comment just to say “you’re wrong” and here’s why etc… don’t bother posting it, spend your time wisely somewhere else.

    Liked by 15 people

    • ragnar5 says:

      Thanks for clearly stating your feelings, Christine! I appreciate your efforts and those of the OEW group to continue your father’s work. Having traded for a living for 25 years and as a 12+ year follower of Tony’s , I continue to find real value here.
      Ragnar, MD eye surgeon

      Liked by 6 people

      • BDUBS1962 says:

        Christine, I really appreciate your efforts as well. I’ve been a follower of the site for many years and I value much of of what you and others write. Unfortunately, there are a few bad actors that clutter up the site who , apparently love to see their names in print (you know who you are!) that I wish would tone it down a bit, as I fear they are alienating some good posters. Thanks for all your effort!

        Liked by 4 people

Comments are closed.