Weekend Report

Weekend Report

Provided by the OEW Group

October 5 2019

SPX opened the week up and rallied most of the day Monday to close at 2977.  Last weeks close was 2962.  Tuesday had a gap up to reach the high of the week at 2993 within the first half hour of trade, but then sharply reversed lower, apparently based on the bad ISM report signalling a contraction in manufacturing.  SPX then sold off the rest of the day Tuesday, gapped down on Wednesday and continued to decline until it found the low of the week at 2856 in the first hour on Thursday.  From there, SPX rallied to reach 2911 by Thursday’s close.  Friday opened with a gap higher and continued a strong rally all the way back to within Tuesday’s price range, before closing the week at 2952.

For the week, SPX/DOW lost 0.33%/0.93% while NDX/NAZ gained 0.94%/0.54%.

On the economic front, ISM Manufacturing and Services were both lower, although Services remains in expansion mode.  Payrolls were higher as the unemployment rate made a 50 year low at 3.5%.  Our Investor Sentiment indicator increased to 56.5% and is quite bullish as we read the data.  The ECRI weekly growth indictor moved up for the third week in a row and is back above the zero line at +0.83%.

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.  Our preferred long term count is posted on SPX, which reflects that Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor, Minute and now Micro waves.  However, we maintain our cautious status that the uptrend may be weakening until Major wave 3 can clearly breakout of this overlapping structure.  Consequently, we’re still tracking our alternate count on DOW in the public chart list.

MEDIUM TERM: Downtrend

spxdaily

SPX extended the decline with a large outside reversal down on Tuesday (same as last week), followed by a gap below the critical 2940 level mentioned last week and reached a low of 2856 Thursday morning.  A strong reversal for the remainder of the week retraced halfway back for the entire decline from the 3022 high.  SPX finished the week at 2952, which is within the next pivot range and just below the medium term EMA’s which are providing resistance for the time being.  This price action confirmed that a new downtrend is underway with the possibility of a completed pattern at the 2856 low.  This also resolved the scale dilemma that we’ve been discussing for the last few weeks.  As a result, we can now count five waves up from 2822 to 3022 with a small fifth wave, which suggests the entire uptrend is Micro wave 1 of Minute wave iii.  Micro wave 2 has been underway since the September top and found support at our 2858 pivot range, with medium term subdivisions that suggest a completed zig zag pattern of three waves down.  This represents a 5.5% decline, which would be typical for this wave scale.  However, we need more price action to see if a new uptrend can take hold, or whether another retest of the low may be forthcoming.  Medium term RSI got sufficiently oversold at the low, which is consistent with prior downtrend lows.

SHORT TERM

spxhourly

As mentioned in the previous section, we’ve rescaled the count to show Micro wave 1 as five Nano waves up from 2822 to 3022, which includes a subdivided leading diagonal for Nano wave i as part of that sequence.  Using our short term techniques we can count seven small wave down from the 3022 top, which suggests a 5-1-1 zig zag pattern for Micro wave 2 so far.  That gives Nano wave a = 2946, Nano wave b = 2993 and Nano wave c = 2856.  We then have a 98 point rally off the low to the intraday high on Friday, which is by far the largest retrace since the downtrend began.  Short term RSI ended the week extremely overbought, so a small wave pullback could come at any time.  With all the volatility this week, SPX ended right back in the same support/resistance zone where it left off last week.  As one of our members pointed out while discussing group sentiment, “nothing has changed”.  So far, only the speculative short term waves have been affected.

Short term support is at the 2929 and 2884 pivots.  Resistance is at the 2957 and 2984 pivots.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 0.83%.

European markets (using FEZ as a proxy) lost 1.49%.

The DJ World index lost 0.90%, and the NYSE lost 1.08%.

COMMODITIES

Bonds are in a downtrend and gained 1.17%

Crude oil is in a downtrend and lost 5.54%

Gold is in an uptrend and gained 0.43%

GBTC is in a downtrend and gained 3.89%.

The USD is in an uptrend and lost 0.22%.

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

 

Have a good week!

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474 Responses to Weekend Report

  1. Jim Guthery says:

    Fiona, has your market analysis changed yet? I am still thinking 2724ish, but the noise upward is getting loud…

    Like

    • fionamargaret says:

      I shall check all numbers at the weekend Jim, and post…I was asked to give a hand elsewhere for the last 3 days, so am somewhat behind….
      I remember joking with Freddie if we went down to 2340 again, we had a nice large trading range….of course I prefer my number of 2137.76….
      Think we may be in a recession already (unemployment figures always show up late)..x

      Liked by 3 people

  2. aahmichael says:

    Tom , not sure why you waste your time with the resident idiot. He claims to be the world’s foremost expert on rates and the bond market, yet, according to him, he sold ALL of his bonds in mid-April when the 10yr was at 2.60%. Bear in mind that he says that those bonds made up 95% of his investment portfolio. Then, a couple of weeks later, he said that bonds were “the short of a lifetime” when the 10yr was at 2.40%. Assuming he got lucky and didn’t take his own advice and didn’t short bonds, that still means that 95% of his portfolio has been sitting in cash for the past 6 months, while bonds went straight up. Kind of hard to get any kind of return on your portfolio with a 95% cash position.

    Liked by 4 people

  3. Page says:

    SELL the NEWS.

    Liked by 4 people

  4. M Wags says:

    Phase 1 deal announced to WH Press Corp just now.

    Like

  5. amberwavesofgain says:

    I’m sorry you don’t appear to have the ability to benefit from his posts. While some of his posts appear to take shots at others’ posts of nonsense, a lot of his posts give good analysis and are backed up by charts that display his interpretation of the market. Other people just want to talk about the “news”. I am more interested in mathematical analysis of market waves, because that is very good advice I received from Tony Caldaro. People that post about “news” should be doing their posts on a different blog.

    Liked by 3 people

    • amberwavesofgain says:

      This was suppose to post as a reply to lml’s comments about Phil’s posts.

      Liked by 1 person

    • mcgcapital says:

      Might just be me, but it sure does feel like the news is moving these markets around. I’m sure it would have rallied to 2990 if China had walked away with no deal because that’s what the wave count said right…

      Wave counting is an academic exercise, doesn’t make money in real time because it’s too complicated and ambiguous

      Liked by 2 people

      • h66h says:

        Wave counting may not make money for you, but it surely makes money for me. To each his own. I have to ask what you’re doing on a wave counting site if “it doesn’t work.”

        Like

        • mcgcapital says:

          I came here with an open mind on whether wave counting worked or not, then realised in 2016 that it doesn’t because the counts were horrendous and wrong at every turn. Stayed around because there was a decent level of discourse on financial markets and investing in the comments but that’s gone down hill recently too.

          I can’t take the counts seriously when they basically project a doubling of the market over the next few years at a time when the economic cycle is turning after a decade long run. They don’t take common sense into account. As for whether something ‘works’ or not, if it did then everyone should be able to agree on what the signals are (long or short) at a given time, the fact that there’s so many different counts suggests there’s nothing systematic about it and it’s hugely subjective, not objective.

          Don’t confuse buy and hope at the end of a long bull market with something working

          Like

          • h66h says:

            What you describe as “common sense” to me sounds like a different philosophy of market analysis, i.e., fundamentals trump technicals. Nevertheless, high inflation could easily accommodate the prediction of a doubling from here, regardless of fundamentals. To a pure technician, fundamentals are irrelevant or even harmful to analysis for several reasons, the main one IMO is they can’t possibly all be known. Yet their net result must be in the chart. I use EW mostly on an intra-day micro basis. Any long term conviction in the market can kill you in the short term, depending on your trading style. Markets are extremely complex chaotic systems; therefore, the best you’re going to get is an edge with probabilities. Expecting perfectly objective and indisputable analysis is unreasonable.

            Liked by 3 people

  6. kvilia says:

    UGAZ – short covering. Interesting, considering NG staying flat.

    Liked by 1 person

  7. M Wags says:

    Treasury Secretary Mnuchin just said he has “no comment” on the trade talks.
    1:50 pm Eastern Press Conference

    Liked by 1 person

  8. Triangle forming folks?!

    trade safe!

    Liked by 2 people

  9. phil1247 says:

    SPX A = C 2996

    got pretty close

    as described this can be wave D of triangle
    if correct
    look for panic emotional e wave down
    then post triangle thrust to new all time highs

    remember …
    all that is required is 1 tick above the old high for wave 5

    Liked by 3 people

  10. mcgcapital says:

    The daily analysis I posted on FTSE the other day was invalidated today with the break up of the 7100-7230 range. Got a couple of decent shorts off 7200 but we’ve not yet managed to get lower lows below 7000. The weekly is still in play though, think the head and shoulders is still by far the most likely outcome. Would be looking for a break under 7000 and a hold of 7100 on any rallies to confirm that these are definitely on… and would also want to see that this month too really, otherwise I’m not that clear on what the bigger picture pattern is.

    The way that I trade is based on support and resistance pivots. So could see on the daily that there would likely be resistance in the 7200-7230 area, and that was confirmed by Tuesday’s sell off. Had a speculative go at selling it on Tuesday for some points, and thereafter that high was the reference point to trade against, so sold twice more in that area on Wednesday and yesterday for a decent number of points. After today’s rally, now it’s bullish while above 7200-7220 area.

    I remain very bearish on these markets, once today is out of the way then I struggle to see much reason to keep going up. And on the next decline, if there’s no scope for trade optimism rumours then what will make it ramp again. Trade deal is likely bearish in that context, plus the fact that the damage to the economy from tariffs is already done and won’t be reversed. That being said, being objective, above 7230 the door has been opened to who knows where, hence I’m waiting on another topping set up or break of 7200 to put the bigger picture decline on the table again. Would expect the market will need some time to top out after today’s move though with some back and forth, and will see if there’s more upside follow through next week.

    This is the difference between having a view (i.e. being very bearish) and reading price, looking for and executing trade set ups in a risk controlled way. I expect bears to reassert themselves soon but will wait for some supportive price action before acting on it.

    Liked by 3 people

    • Page says:

      Nothing more than Sugar rush rally. People have no idea what’s in the so-called trade deal, once they find out the reality, the bears will be roaring back sooner than people think.

      Liked by 1 person

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