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. lml25 says:

    I took profits on my GDX buy at 28.26 here at 29.07–unless it goes up further–then I didn’t take profits…lol.

    Liked by 2 people

  2. phil1247 says:

    took profits on bonds and removed hedge
    waiting to see what happens at this key area

    Like

  3. phil1247 says:

    GC
    gold is still going nowhere as described for weeks on end
    still stuck between 1570 and 1482

    Liked by 1 person

  4. M Wags says:

    News out on EXAS!

    Cologuard receives FDA approval for the 45 – 49 age group.

    This approval was several quarters ahead of expected and ahead of management’s formal guidance of “first half of 2020”.

    The total addressable market for once every 3 – year use of Cologuard just increased by nearly 20 million people in the U.S.

    Liked by 1 person

  5. fionamargaret says:

    UVXY
    TLT up to 225….chart below, scroll down to the box chart….the naysayers have suggested shorting since110.867 which was a totally perfect entry point….
    GLD up to 199….box chart presented late Friday afternoon…again many naysayers at 116.522…perfect entry point
    SLV up to 26…..box chart presented late Friday afternoon
    10 yr. yield down to 1.36, 1.25
    UWT up to 27 (long oil)
    UUP ($US) up to 36
    EUO (short euro)
    $SPX down to 2137.76

    Tight stops
    https://stockcharts.com/freecharts/gallery.html?TLT

    Liked by 3 people

  6. aahmichael says:

    Last night’s action once again shows how news moves the markets…in both directions. At last night’s open, stocks gapped higher and bonds gapped lower on nothing more than fake positive trade news. (has positive trade news been anything other than fake for the last 14 months?) The markets sustained those levels until 3:00am when the German PMI data was released, and those hard data numbers were horrible. (Warning: A good argument can be made that Germany is already in recession.) Both stocks and bonds immediately reversed hard on the hard economic data, fully erasing the entire open gaps and then some.

    Overnight action like last night is yet another perfect example of the futility of trying to trade ETFs short term instead of trading futures. Why anyone would use a trading vehicle like ETFs that are not available for trading for the majority of the hours that the markets are open is, imo, insanity…yet that’s exactly what people do who try to trade ETFs short term. The results are predictably always disasterous. “Praying that the market stays where it is until I can exit my trade in the morning” is not a sound trading or investment strategy. Profits turn into losses, and losses turn into bigger losses. Add in the fact that you can’t use stops overnight on ETFs, then what you have is a death wish. It’s a suicidal strategy.

    Liked by 5 people

    • M Wags says:

      You are spot-on Michael.

      I could not have expressed it any better!

      People get “trapped” in ETF’s more often than not.
      And in this kind of market that has been ultra-sensitive to news, ETF’s and ETN’s are clearly a recipe for disaster.

      Liked by 3 people

  7. gyywhgyywh says:

    Hi, Christine: Sorry to bother you. Could you please tell me for zz bHGX daily chart: wave count is 1-2 which means up trend, but in this chart : wrote down trend. I got confused. I think  the housing market chart  is in up trend. Am I right? Thank You

    Like

  8. J.Wenger says:

    Thanks Christine & OEW group! Would love to see a drop to those short-term support pivots to shake out the weak hands, and then a run through resistance to those target highs! For now, I’m just sitting on my hands.

    https://www.invest-safely.com/stock-market-outlook-2019-09-22.html

    Liked by 2 people

  9. phil1247 says:

    Gary Lewis

    ZB gapped down from our short entry late friday

    take profits in am

    Like

  10. cj32 says:

    Cr. to CBZ re: ESZ

    Liked by 1 person

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