Weekend Report

Weekend Report

Provided by the OEW Group

October 26 2019

SPX opened the week up and rallied to reach 3007 by Monday’s close.  Last weeks close was 2986.  Tuesday gapped higher and rallied to 3015 by early afternoon, then declined to finish as an outside day down at 2995.  Wednesday opened lower and made the low of the week at 2991 in the first half hour of trade, then rallied back for the rest of the day to finish at 3005.  Thursday opened with a gap higher and reached 3016 in the first half hour, then reversed and chopped around in a 16 point range for the rest of day, before closing at 3010.  Friday opened lower but quickly reversed and rallied to the high of the week at 3027 before noon, then consolidated for the rest of the day to finish the week at 3022.

SPX/DOW gained 1.22%/0.70% while NDX/NAZ gained 2.04%/1.90%.

On the economic front, Existing and New Home Sales declined while median prices increased.  Durable Goods Orders declined for total and ex-transportation.  EIA Crude Inventories declined.  Consumer Sentiment (final reading) was up from prior month at a bullish 60.5%.

LONG TERM: Uptrend consolidating

wklyreport

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.  We modified our long term status to identify that the uptrend is consolidating and that remains until Major wave 3 can clearly breakout of the overlapping wave structure.  Our alternate count for a potential breakdown is posted on the DOW in the public chart list.

MEDIUM TERM: Uptrend

spxdaily

SPX continued the rally this week to reach 3027, just one point shy of the all-time, before pulling back to finish the week at 3022.  The rally was sufficient to confirm a new uptrend and the medium term status has been updated accordingly.  We now have NAZ, NDX and SPX in confirmed uptrends and we’re expecting DOW to follow in the coming days.  Several other key indices have confirmed as well, such as DJW, NYA, TRAN and XLF.  This suggests Micro wave 2 completed at the 2856 low early this month and Micro wave 3 has been ongoing ever since.  Our nominal target for Micro wave 3 would be 1.618x Micro wave 1, which gives 3180.  However, if the rally fails to exceed the 3056 pivot, which is right at Micro wave 3 equal Micro wave 1, then the consolidation pattern that’s been in play since last October will remain.

SHORT TERM

spxhourly

Not much has changed short term.  We continue to count three waves up from the Micro wave 2 low as Nano wave i = 2960, Nano wave ii = 2893 and Nano wave iii in progress.  Nano wave iii has now extended beyond the length of Nano wave i, which further suggests an impulsive pattern is underway.  The next level to watch for a potential target is 3061, which is the 1.618x ratio.  A retrace back to 2960 would warn that another subdivision may be in play, while below 2893 would invalidate the impulse.

Short term support is at the 2995 and 2984 pivots.  Resistance is at the 3033 and 3046 pivots.

FOREIGN MARKETS

Asian markets (using AAXJ as a proxy) gained 1.48%.

European markets (using FEZ as a proxy) gained 0.44%.

The DJ World index gained 1.31%, and the NYSE gained 1.07%.

COMMODITIES

Bonds are in a downtrend and lost 0.29%

Crude oil is in a downtrend and gained 5.18%

Gold is in an uptrend and lost 0.75%

GBTC is in a downtrend and gained 4.75%.

The USD is in a downtrend and gained 0.61%.

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

 

Have a good week!

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427 Responses to Weekend Report

  1. tsiamp says:

    I really cant believe that there are only three- four people in this site have seen the big correction for SPX 500 which immediatily and sharply will begin

    Like

  2. cj32 says:

    Cr. to CBZ

    Liked by 3 people

  3. M Wags says:

    It’s interesting to note that Barrons’ Big Money Poll which surveys the view of 134 money managers across the country, showed a reading of only 27% Bulls responding in their Fall Poll, calling themselves bullish about the market’s prospects for the next 12 months.

    This 27% reading of Bulls was down from 49% in their Spring survey and 56% from a year ago In fact, the reading is the lowest percentage of Bulls in more than 20 years.

    The Big Money Poll’s ranks of Bears has also swelled to levels unseen since the mid-1990’s. With major U.S. equity indexes trading within a few points of their July highs when the survey was conducted (emails were sent out at end of September), the Fall poll found 31% of respondents Bearish and 42% Neutral.

    Like

    • mcgcapital says:

      These guys probably have had much of the same background training that I’ve had and are looking at the markets from the same perspective I am. And I think it’s unlikely that we’re going to see a huge swing from them being bearish to being bullish unless the macro picks up. And there’s no sign of that despite some people being desperate to jump on anything remotely positive to support a bullish view

      Most people who’ve had a formal financial education can see that there’s something not quite right about these markets. Negative rates aren’t normal or rational… shorting volatility for profit isn’t a long run winning strategy… markets barely responding to bad data and lowered earnings forecasts for months on end, all not normal. But that doesn’t mean that we should just all forget about everything and buy… it means that risk to portfolios is huge the higher it goes.

      “I never use valuation to time the market. I use liquidity considerations and technical analysis for timing. Valuation only tells me how far the market can go once a catalyst enters the picture” – Stanley Druckenmiller

      The fact that US valuations are sky high means the downside is massive when it actually starts going down. Can’t believe some are claiming there’s lots of cheap stocks out there therefore it will go up if they rally, yet totally ignoring the aggregate picture. I remember fund managers telling me that in 1999-2000, the market was so overvalued but that they could still find sectors and stocks with value as it was just certain areas that was overvalued. Now in the everything bubble you’re hard pushed to find anything with much value if you consider what will happen to earnings. And then on top of that there are some areas of the market that are grotesquely overvalued like US tech. Imagine what will happen to SPX when those sectors deflate. Even if other areas rally it won’t offset that.

      But for now artificial liquidity is ruling. Surprised by how many people on here and twitter seem to think markets will just carry on up indefinitely and think the bigger picture can be ignored, or that everything we’re seeing is totally normal. Suppose you have to let them gloat when the market makes new highs, it probably takes the short term collapse off the table as we’d need more back and forth before breaking 2800s you’d imagine. But many people seem emotionally attached to rising markets and just buy. I’m glad I only manage money for myself so can sit with popcorn and wait for the bigger moves to play out. The size of the disconnect between price and reality is now so big that it’s hard to imagine the drop won’t be 50+% when CBs lose control of it. Unfortunately a lot of people will end up holding that bag since they’re so emotionally attached to rising markets and believe all the nonsense about new bull markets and bull markets lasting into the 2030s.

      Liked by 6 people

      • many people seem emotionally attached to rising markets

        MCG, great comments as always.
        But I don’t think you get this. You are “wrapped too tight” Mr. MCG.
        When bull market are working, the average investor doesn’t believe his good luck that it can be going up, so easily, so simply. So, he has no nerve to buy the triple QQQs, or better, the TQQQ. But once it stops going up, he says, OK, the insanity has stopped. Now I can own all of those crazy leveraged ETFs. Make big money without the insanity.

        Problem is, all trading and investing is a paradox. Have to buy when it looks like crap, and sell when it looks flawless. Difficult to master.
        The insanity is part of the deal. Once the insanity starts to “waffle” the longs are dead.

        Liked by 2 people

        • mcgcapital says:

          I just think that there are lots of people out there that no matter what happens to price, to earnings, to the economy.. it’s always bullish to them. So if for whatever reason it doesn’t happen they aren’t going to be happy. The best forward returns come after large down moves with low valuations.. the higher markets climb, the more good news is priced in. The times to be aggressively bullish was 2009-2011, the rest of the time was a time for holding and now is a time to be much less aggressive. Patience will be rewarded here

          I must have seen 30 people this weekend celebrating new highs and talking about breakouts. That’s a lot compared to usual

          Liked by 3 people

        • phil1247 says:

          totally disagree Tom

          you buy strength………
          sell weakness

          Like

      • phil1247 says:

        mark
        i wont get into with you about why fundamentals earnings etc dont matter
        because i know i am not going to change your mind

        what i would ask is for you to think back
        when i told you we are going to see 3057…
        and you said its totally unsupported and highly unlikely
        well ……….. here we are

        i am telling you now we are going to keep going up
        i cant tell you exactly how high right now but
        this can go on much longer than you can ever imagine …..
        you would do well to
        pay attention to MR Ts prediction for the bears

        “PAIN”

        Liked by 1 person

        • mcgcapital says:

          Yeah I can’t really believe we’ve rallied 750 SPX points in 10 months on hardly anything positive. So I definitely didn’t expect to see 3057. However, we’re miles away from being out of the woods. Tony’s count still looks wrong vs everything I know about the financial system and economy.

          Let’s see if this adds to gains this week

          Liked by 1 person

          • phil1247 says:

            mark
            i enjoy our bants ….
            i agree with you that none of this is fundamentally supported
            but that doesnt stop me from looking for 3208 SPX

            if 3057 supports this week
            it could be straight up from there ………..
            lets take it 15 min at a time

            Liked by 2 people

    • sixpack says:

      Thanks Wags. Good info, and very bullish!

      Mcg and his formal financial education thesis. Omgosh. Lol. Way too funny. Ive heard it all now. Just write a book mcg and get it over with!

      Liked by 2 people

  4. sixpack says:

    Yep, They were still shorting it on Friday. Amazing!

    Liked by 1 person

  5. phil1247 says:

    SPX

    3057 has been blasted above !
    new extension long is in force
    they kept saying

    impossible….not fundamentally justified ….etc
    money manglers had wave counts that deemed SPX only a short
    people were criticizing Tony on his own blog
    thinking that they were elliott wave gurus
    when they knew nothing

    Tony has one again shown the correct path
    with words of wisdom i will never forget …………..

    ” if you continue to persist in your bearish ways ….
    you are going to miss the entire move up to DOW 100 thousand ”

    thanks Tony

    Liked by 6 people

    • aahmichael says:

      This is really funny. The market bottomed on 10/3, retested the bottom on 10/8, and then grinded its way higher the rest of the month. So who was on the wrong side of October’s entire rally and calling for much lower prices? Phil was.

      phil1247 says:
      October 9, 2019 at 1:46 pm
      so according to your theory
      the market should be shooting up now ergo … lets short it !!!!!!!
      (Note: SPX was at 2917 when Phil said to short it)

      phil1247 says:
      October 10, 2019 at 2:31 pm
      retest of 2940 hwb es is ideal short entry

      phil1247 says:
      October 10, 2019 at 2:35 pm
      if it holds you are looking for 2815
      and risk would be up to 2961 es until 2815 is hit

      phil1247 says:
      October 18, 2019 at 11:20 am
      es 2984 broken
      let the swooooooshhhhhhh begin
      (Note: the market bottomed that day at 2976, exactly when Phil posted this)

      phil1247 says:
      October 18, 2019 at 11:24 am
      support now drops to 2913 es

      phil1247 says:
      October 18, 2019 at 11:28 am
      bounce potential at 2931 but i wouldnt trust it
      (Note: Phil called for a 70 point swoosh right at the dead low. Oops!)

      phil1247 says:
      October 30, 2019 at 8:41 am
      SPX cash top is in at 3048 until proven otherwise

      phil1247 says:
      October 30, 2019 at 8:44 am
      trading below spx 3027 would have me looking for short entries
      (note: SPX traded down to 3023.19)

      phil1247 says:
      October 31, 2019 at 9:46 am
      spx extension failed this time
      now looking for short entry
      (note: once again Phil shorted the dead low)

      Only one time in the entire month did Phil say to get long, however, that trade got stopped out immediately.
      phil1247 says:
      October 31, 2019 at 9:19 am
      bought at 3031 cash
      stop is at 3029
      worth a shot here to see if it holds again

      Liked by 5 people

      • M Wags says:

        Ouch!

        Thats just brutal.

        Almost as bad as that Bond call he made in May for higher rates…when the 10 year yield was at 2.40%

        Liked by 1 person

        • fionamargaret says:

          …and such interest in TLT…(and yes, I think this is just a countertrend and TLT is going higher), but I am not being asked to wish me luck, but to trash my ideas. (or jump on for the last few dollars and accept the praise.)..like UGAZ.(which was a Page, Kvilia, and my suggestion….
          10 year yield I expect to go down to 1.36, 1.25, 1.00…just a delay.
          GLD I expect higher ….it is still in the progression with a top of 199.
          UUP ($US) is still suggesting 36, and I am short Euro (EUO)
          I was taking heat for keeping to the same ideas, but they all greatly exceeded the indices.
          TSLA I suggested the night before at 177,and play it using the numbers.
          Ditto with LULU and the squid (GS).

          Like

      • gtoptions says:

        Take note, the so-called professionals on this blog have been Bearishly wrong for a long time.

        Like

    • mcgcapital says:

      Phil we’re miles off Dow 100,000 lol. Let’s see what happens next few weeks here because every time we’ve made new highs for the last 2 years it’s sold off sharply again. A strong market breaking out should have no problem continuing straight up now, so let’s see if that can actually happen.

      Trendline resistance looks pretty strong though

      Liked by 1 person

    • Phil, thanks for bringing back a thought from the past with the late, great Tony Caldaro. I remember when he said that——–the other day I was cleaning out my in-box and found a blog from Tony during the XMAS, 2018 drop. I know many on this blog will never forget his memory, his generosity, his wisdom and his smarts.

      Liked by 3 people

  6. My limited understanding of earthquakes is that large plates in the earth try to move in opposite directions without accomplishing the move. That action stores force. But when the plate do successfully move, the great amount of force has already been stored explosively releases the force. That’s just plain physics.

    I’m long $gold. It’s a very strong bull market, regardless of what the high volume posters on this MB say.

    I don’t know what day it will be, but at some point we will see the largest bumper crop of bag holders that has been seen in decades.
    MHO

    Liked by 1 person

  7. wahlyelim says:

    Well done Christine and OEW team for a bias towards the upside for the SNP.
    Short Term: Although into overbot condition any time soon for a decent pull back but momentum dip buying prevails for now.
    Medium Term: Uptrend. Investors to stay invested.
    Long Term: Uptrend. Investors to stay invested.
    Investors should be happy with the 3rd time of interest rates reduction this year by Federal Reserve which is condusive for higher levels down the road as US economy is in the late stage of of an economic expansion and US is the best performing economy till date.
    Fear of recession till date is a contrarian indicator for more short covering and new buying to surface. No euphoria in the mkt presently. You may say tariff news have more or less been discounted by the mkt.
    As such Tony’s Growth Cyclical stage to end in there about 2034 will be self fulfilling but yet the SNP needs to navigate few more bulls and bears trend to reach Tony’s final objective.
    But investors should be open to all outcomes when the sentiment changes for the worse by monitoring the US economic fundamentals which till date have not even showed any signs of deterioration.
    The maxim: The trend is your trend until it bends.
    For medium/long term investors to do well for the long haul, short term mkt direction mostly basis on suspecting news but cannot derail a secular bull mkt that the US is presently experiencing should not be used for medium/long term investments decision making.
    Short term price movements are mostly technically driven and getting the mkt right is more or less a 50 per cent coin tossing. Heads you win, Tail I lose.
    I have repeated few times already that recession is presently not in sight is good for the secular bull trend to continue for the mkt to continue climbing a wall of worry.

    Liked by 8 people

  8. gtoptions says:

    Traders actually shorting this breakout! All I can say is Good Luck! I’ll come back and see how everyone fares when the SPX pushes 3200+. Enjoy
    SPX ~ https://www.tradingview.com/x/ZaVK2YoI/

    Liked by 6 people

  9. M Wags says:

    The most talked about stock ever in the history of Elliott Wave Lives On, with the symbol EXAS rallied $13 up from its after-hours low of Tuesday to close at $90.00

    I guess those targets of $69 and $47 will have to wait.
    🙂

    Liked by 2 people

    • SPYtrader says:

      M Wags,
      Still no Buy signal for me. As I mentioned before, I never buy at the bottom. From my vantage point the trend is still down. I will leave the lower targets and the higher targets to others. The best scenario for me would be it goes into a trading range for weeks to several months and then breaks higher. I’m still interested in owning it for a more longer term investment.

      Like

    • gtoptions says:

      You’re only down 26%.

      Liked by 3 people

    • Philippe V says:

      Amazing that Phil hasn’t yet explained to the whole world what an obvious trade that was and that he pocketed these 13 dollars 😂

      Liked by 1 person

      • M Wags says:

        Phillippe, Im still puzzled why someone who said that EXAS was “an accident waiting to happen” at $90 this past Summer never got short. Is it because it went to $124 first?

        Like

        • fionamargaret says:

          Be careful if you have bright ideas, but know you are treasured.

          Liked by 2 people

        • aahmichael says:

          Wags, that guy can’t short individual securities because he doesn’t qualify for a margin account. The only way for him to short anything is with an inverse ETF. Doctors have a well deserved reputation as financial idiots, and he’s a perfect example of that.

          Liked by 1 person

          • M Wags says:

            Aamichael…

            The physicians that Ive met during my lifetime have always been great listeners, extremely HUMBLE, secure with themselves, and showed little ego.

            Phil is the exact antithesis of that.

            Like

  10. SPYtrader says:

    GE is going to $1, not $4
    The Depression starts this weekend. I am buying a lot more guns.

    Liked by 1 person

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