Provided by the OEW Group
December 7, 2019
SPX closed last week at 3141 after making a new high at 3154 into the Thanksgiving holiday. Negative trade news gapped the market lower on Monday, consolidating in the 3110/3120 range. Tuesday saw another opening gap lower, testing 3070 in the first hour before steadily grinding higher into midweek to recapture the 3110/3120 zone. Friday’s robust employment figures drove the market out of congestion to retest the highs, reaching 3151 before finishing the week at 3146.
SPX gained 0.16%/DOW lost 0.13% while NDX/NAZ lost 0.08%/0.10% this week.
On the economic front, the following reports surprised positively or met expectations: Manufacturing PMI 52.6; Services PMI 51.6; weekly jobless claims 203k; factory orders 0.3%; nonfarm payrolls 266k vs 156k, much better than in October; unemployment rate 3.5%; whole sale inventories 0.1% and Consumer Sentiment Index 99.2 up from 96.6 in November. On the downside: ISM Manufacturing Index 48.1%, ADP employment report 67k vs 121k in October, ISM Non-manufacturing Index 53.9% and average hourly earnings 0.2%.
Next week’s highlight is the FOMC announcement on Wednesday. Other than that, we get NFIB Small Business Optimism Index, CPI, PPI, weekly jobless claims, retail sales, import prices and business inventories.
LONG TERM: Uptrend extension likely underway
In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009. Primary I concluded in mid-2015 with Primary II concluding in early 2016. Primary wave III has been underway since February 2016 with the Major wave 1 high occurring in October 2018 and Major 2 bottoming in December 2018. Our preferred long-term count is posted on the SPX Weekly chart, which reflects that Intermediate wave i of Major wave 3 is underway and continues to subdivide into Minor, Minute and now Micro waves. A breakout above the September Micro wave 1 uptrend high at 3020 has occurred, ushering in a series of potential wave 3 moves higher. However, we’re still waiting to see if the current trend continues to make new highs, rising enough to not overlap the previous uptrend high, during the next downtrend. Until then, we maintain our low probability bearish alternate count as posted on DOW in the public chart list. Note this week how the 13 EMA on the weekly time frame provided support for Thursday and Friday’s strong rally.
MEDIUM TERM: Uptrend inflection point
After posting another all-time high during the previous week at 3154, SPX started this week/month with a sharp pullback to 3070. This ~2.7% decline was the largest counter trend move since October and sets up some interesting possibilities. The pictured scenario sees 3154 as a completed wave, either Micro wave 3, or a potential Nano wave i from the downtrend low at 2856 in early October. The Micro wave 3 scenario suggests the current uptrend may be at or close to completion, while the Nano wave i scenario suggests a very bullish extension may be in play. Consequently, we’ve updated the medium term status as an inflection point. This inflection point will likely remain until either a downtrend is confirmed, or SPX can rally above 3200 or so. A few indices such as SOX and TRAN are in confirmed downtrends, which could be a warning sign for the more bearish medium term outlook. Either way, we continue to project a bull market into 2020 as part of the Minute wave iii subdivision that’s been underway since the 2822 low in early August. Our nominal target for Minute iii sometime early next year remains unchanged at 3300. Once the inflection point is resolved, we will update our medium term projection.
The short term count tracks closely with the medium term subdivisions. We can count five qualified waves up from 2856 to 3154 with a large third wave, which gives a nice impulsive structure to that point. Nano wave v for that sequence fell short of our 3180 target, but was pretty close to fib ratio 0.618x Nano wave i, and stopped right near our 3156 pivot. From there, we have the largest pullback for the entire trend at 84 points to the 3070 low. This is typical for a subsequent retrace to exceed the prior fourth wave when the fifth is smaller than the first. SPX set up a positive divergence off that low on Tuesday, which preceded the strong rally into Friday to another qualified wave at 3151. Given the inflection point mentioned in the previous section, we’re counting the 3070 low as either Nano wave a of an ongoing Micro wave 4, or possible Nano wave ii which would suggest a rescale of the prior small waves down one degree. SPX reached extremely overbought level at the highs this week.
Short term support is at the 3121 and 3105 pivots, and resistance is at the 3156 and 3180 pivots.
Have a good week!
Potentially short term bullish scenario then need to overlap 1 with 4 before fed capitulates with QE4$EVA, its personal =( That dont mean it will work though…..
RE : Prechter
people like to bash him but he saved my bacon in 1987
we were making money like crazy in 1987 but i was reading
and communicating with bob prechter …
he actually responded to my questions with handwritten answers on post cards
i took his advice and cut back on stocks in the september swoon
but when the bounce came before the crash i put some back in
and got caught with about 20 % of my portfolio exposed
painful but not the disaster it could have been
without Bob Prechter i could not have retired in 1989
and would probably still be working
LikeLiked by 4 people
ESH20 …MARCH futures
STRAIGHT UP above 3153 to 3205
should overlap at 53 occur
a smash down to 45 could be a buy entry ………
below there bears are gaining a toe hold
otherwise it SLEEPY time for bears and
see you in the springtime
LikeLiked by 1 person
I dont know why ANYONE would follow a pundit like Prechter, let alone anyone else.
FOLLOWING someone means that you have no methodology in place.
now i see how you lost 1 million dollars
you have a FLAWED methodology
its called trading the news
please deliver my newspaper early tomorrow
Phil, you’ve never once posted a trade confirmation of a trade in EXAS here.
You’re all talk.
I think you must be a delivery boy!
Facebook Page: Amos Pence Ailanjian
Just posted video of Monday’s Game Plan to Go Long just Above Flag Setup on 2 Minute time frame.
AMD Who’s chips are inside MSft New Xbox Game.
Hope you like video.. natural movie 🎥 producer.
GL enjoy weekend
Please Amos, this whole spam thing is beyond old. Please stop
LikeLiked by 3 people
No problem. Just posting my game plan. You guys ask me to post before I make the trade. So, I’m giving you 100% proof with video of my game plan before I make the trade.
Now, you feel it’s spamming..
I’ll stop posting ..
A very well written article on why ETN’s like the VXX and TVIX are huge money makers for big banks like Barclays and Credit Suisse.
Can you say contango ?!?!?!
LikeLiked by 3 people
Yea, I have been burnt in Uvxy, trying to play the down move. I would never touch TVIX though because it is an ETN.