Weekend update

REVIEW

Nastiest week of the bear market by far. The selling felt like it was on cruise control. The week started at SPX 2600. After a gap down opening on Monday the SPX made a new downtrend low at 2531. A gap up opening on Tuesday ended with a lower downtrend low at SPX 2529. Wednesday, FOMC day, had a steady rise to SPX 2585 just after the 25bps rate increase was announced. Then for the next hour, including a half-hour pressor with FED chairman Powell, the SPX dropped 100 points to a new downtrend low at 2489. Thursday’s gap down opening added to the selling, and another new downtrend low at SPX 2441. Friday had a quiet open, rallied some on NY FED Williams CNBC interview, then dropped 100 points to a new downtrend low at SPX 2409. New downtrend lows all five days. For the week the SPX/DOW lost 7.0%, and the NDX/NAZ lost 8.35%. Economic reports for the week were mostly positive. On the downtick: the NY/Philly FED, NAHB, plus weekly jobless claims rose. On the uptick: housing starts, building permits, existing home sales, leading indicators, durable goods, personal income/spending, consumer sentiment and Q3 GDP was finalized at 3.4%. The ECRI was unchanged at -3.9%. Next week’s reports will be highlighted by the Chicago PMI and housing. Merry Christmas!

LONG TERM: downtrend probable

If anyone was questioning this bear market, it certainly has made its presence known these past three weeks: -12.4%. In fact, CNBC has been touting this December as the worse one since 1931. We checked, that one was the DOW was down 17.0%. The DOW is currently down 12.1% for the month. Of the seven major US indices we track, excluding the SPX sectors, only the volatile R2K has confirmed a bear market. As of Friday it has already lost 26%. The other six are all close. The NYSE, which we carry as an international index, has also confirmed a bear market. It is down 19.2%. It joins Australia, Canada, China, France, Germany, Greece, Spain, and S. Korea. Which are also in confirmed bear markets.

The long term count posted on the weekly chart remains unchanged. A Primary I bull market from 2009 completed in 2015. Then a Primary II bear market ended in 2016. The recent bull market, 2016-2018, was Major wave 1 of Primary III. This bear market is Major wave 2. There are three Fibonacci retracement levels that should provide support for Major wave 2: (38.2%) 2509, (50.0%) 2376, and (61.8%) 2242. Obviously the first one did not hold. Our worse case support has been around SPX 2400, which is also close to the 50% retracement, and the 2385 pivot.

MEDIUM TERM: downtrend

We are still counting this downtrend as a large double zigzag. A Minor A zigzag from SPX 2941-2604. Then a Minor B rally to SPX 2815. Then a Minor C zigzag down to SPX 2409 thus far. At first we thought SPX 2478 could hold (C = A). But it failed on Thursday. The next two Fibonacci supports are SPX 2309 (C = 1.5A), and SPX 2270 (C = 1.62 A). Lots of Fibonacci support levels between the bull market retracement and the C wave relationship: 2376, 2309, 2270, and 2242.

Technically, most of the RSI and MACD indicators have not been very useful in this avalanche of selling. We had thought that the “Tariff Man” comment could lead to a mini-crash. Guess this week was it. Currently, the daily MACD/RSI are both extremely oversold. The weekly RSI has a positive divergence, which usually ends downtrends during bear markets. The monthly RSI is now as oversold as it was during the 2015/2016 bear market. When markets are this one-sided to the downside it usually takes an “event” to reverse them.

SHORT TERM

Trying to track the short term waves during this downtrend has been a nightmare. Fifty, sixty point rallies followed by one hundred point declines have occurred on a regular basis. We even had a 100 point decline this week that took only an hour after the FOMC statement. The SPX/DOW and NDX/NAZ have all wiped out their entire 2018 gains in just two months.

Nevertheless, there are additional potential supports at the previous downtrend lows of this bull market: SPX 2408 Minute ii, and SPX 2322 Minor 4. Add them in to the previous four potential supports and we have: 2408, 2376, 2322, 2309, 2270, and 2242. The market hit SPX 2409 on Friday. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower and lost 1.8% for the week.

European markets were all lower and lost 3.7% for the week.

The DJ World index lost 5.2%, and the NYSE lost 6.1%.

COMMODITIES

Bonds remain in an uptrend and gained 0.5% on the week.

Crude remains in a downtrend and lost 12.0% this week.

Gold is still in an uptrend and gained 1.4%.

The USD is now in a downtrend and lost 0.5%.

NEXT WEEK

Tuesday: Christmas holiday. Wednesday: Case-Shiller. Thursday: jobless claims, consumer confidence, and new home sales. Friday: the Chicago PMI and pending home sales. Best to your week!

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

Posted in weekend update | Tagged , , , | 854 Comments

Wednesday update

SHORT TERM: flat open then typical FOMC selloff, DOW -352

The first three days of the week had Asian markets -0.4%, and European markets -1.3%. US markets gapped down on Monday, and made a new downtrend low at SPX 2531. Gapped up on Tuesday, but still made a new downtrend low at SPX 2529. Opened flat on Wednesday, rallied into the 25 bps rate increase at 2pm, then made another new downtrend low at SPX 2489. Guess the market didn’t hear what it wanted to hear during the press conference. The FED did lower the number of rate increases for 2019 from 3 to 2. But did not mention anything about reducing the Quantitative Tightening, which has been draining liquidity at a rate of $50B per month. Since the next likely rate increase is not until June or even September, then it must be all about liquidity and QT now.

We can still be certain, at this juncture, the stock market is still in its first downtrend of this bear market. The OEW 2525 pivot, which was only added last week, was tested two times this week then broke today. The next OEW pivot is at 2479. Around that level Minor C equals Minor A. Strong support? Positive divergences continue to appear on the hourly and weekly charts, with oversold daily and monthly RSIs. With options expiration up next, the volatility is certainly to continue. Still a day traders markets!

MEDIUM TERM: downtrend

LONG TERM: downtrend most probable

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

Posted in Updates | Tagged , , , | 682 Comments

Weekend update

REVIEW

The market started this roller coaster week at SPX 2633. After the low open on Monday the market dropped to its lowest level of Intermediate wave A at SPX 2583. After that the market rallied strongly, went higher Tuesday, and even higher Wednesday to SPX 2685, before it started to pullback. The pullback was just as fast to the downside as the SPX hit 2594 Friday afternoon, before closing at 2600. Down 50, up 100, down 90. For the week the SPX/DOW lost 1.25%, and the NDX/NAZ lost 0.55%. On the economic front positive reports outpaced negatives ones. On the downtick: import prices, plus the budget deficit increased. On the uptick: the PPI, retail sales, industrial production, capacity utilization, business inventories, plus jobless claims improved. The ECRI ticked up a bit this week. Next week’s reports will be highlighted by the FOMC meeting and Q3 GDP.

LONG TERM: downtrend probable

It seems every time the market has made a low during this downtrend, with positive hourly/daily divergences and a weekly oversold RSI, we expected the downtrend to have ended. The market then rallied for a period of time, only to roll over and make lower lows soon thereafter. Such was nearly the case again on Monday at the recent SPX 2583 low. The medium term Intermediate wave A downtrend continues.

Long term not much has changed. Five Intermediate waves up from SPX 1810 to SPX 2941. Int. iii subdivided into five Minor waves. All corrections, alternated with their corresponding wave degrees. An EW normality that has been nearly absent in recent years. With Major wave 1 completed, a Major wave 2 bear market is probably underway.

MEDIUM TERM: downtrend continues

As noted, we had thought Monday’s low was finally the end of this first bear market downtrend. We had labeled a tentative Int. A at its low. But after a 100 -point rally the market dropped nearly back to that low again on Friday. It would appear, as of Friday, all four indices will need to make that lower low before this downtrend can conclude. We still think the SPX 2577 level should hold. If not SPX 2550.

The downtrend pattern remains the same: an a-b-c down A, an a-b-c up B, and now an a-b-c down C. The entire pattern appears to be a complex 3-3-3 taking the form of a flat. Thus far it looks somewhat similar to Primary 2, only shorter in duration. P2 had a 4-month downtrend, a 1-month uptrend, then another 4-month downtrend. This first downtrend is currently just 2-months.

SHORT TERM

After Monday’s low we tracked the advance from SPX 2583 to 2685 as 5 choppy waves up: 2674-2621-2660-2637-2685. The decline from that high has been 5 choppy waves down: 2650-2670-2637-2656-2594. Since the declines have recently been 7 choppy waves down. We expect a short 20-point rally soon and another low to end this wave. Then another attempt at Intermediate wave B?

Technically a small rally, then decline could setup another hourly positive divergence. The weekly RSI is already sitting at a positive divergence. Maybe the FED will be the catalyst to put in the final low, and get Int. wave B underway. Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2656 pivots. Short term momentum ended the week oversold. Best to your options expiration trading!

FOREIGN MARKETS

Asian markets were mostly lower on the week for a net 0.5% loss.

European markets were mixed and gained 0.3%.

The DJ World index lost 1.2%, and the NYSE lost 1.6%.

COMMODITIES

Bonds continue to uptrend but lost 0.3% on the week.

Crude remains in a downtrend and lost 2.7% on the week.

Gold remains in an uptrend but lost 0.9% on the week.

The USD continues to uptrend and gained 0.6% on the week.

NEXT WEEK

Monday: NY FED at 8:30 and NAHB at 10am. Tuesday: housing starts and building permits. Wednesday: existing home sales and FOMC statement. Thursday: jobless claims, leading indicators, and Philly FED. Friday: Q3 GDP, durable goods, personal income/spending, consumer sentiment, and options expiration.

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

Posted in weekend update | Tagged , , , | 650 Comments

Wednesday update

SHORT TERM: gap up opening, DOW +157

For the first three days of the week Asian markets have gained 0.3%, and European markets have gained 1.7%. The US started the week at SPX 2633. On Monday it opened slightly lower, then pulled back to its lowest level of this Int. A correction: SPX 2583. After hitting that level the market quickly rebounded to end positive on the day. On Tuesday a gap up opening drove the SPX to 2674 in the opening hour, but then it sold off to SPX 2621. Another rally to SPX 2660 was also sold off to SPX 2637. Wednesday another gap up opening, which carried the SPX to 2685. Then of course another pullback, this time to SPX 2651 where it closed.

From Monday’s potentially Int. A SPX 2583 low, the market has tried to establish a new uptrend. Thus far the rally has been quite choppy: 2674-2621-2660-2637-2685-2650. Certainly not impulsive. But a B wave rally does not have to been impulsive. These last couple of days the NDX/NAZ has been leading and the DOW has been lagging. If the growth sector wins out in the end, an Int. wave B could be well underway. Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum is working off a negative divergence at today’s highs and has dropped to below neutral. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

Posted in Updates | Tagged , , , | 291 Comments

Weekend update

REVIEW

Another volatile week. The week started off at SPX 2760, after the best week in 8 years. A gap up opening Monday put the SPX at 2800, and then it started to pullback. On Tuesday the market gapped down at the open and traded down to SPX 2697. Another gap down opening on Thursday took the SPX to 2622 before it started to rebound. After closing at SPX 2696 on Thursday, the market rallied to SPX 2709 on Friday before heading back down again. Another pullback took the SPX to 2623, before it rebounded some into a 2633 close. For the week the SPX/DOW was -4.55%, and the NDX/NAZ was -4.85%. Economic reports for the week were mixed. On the downtick: monthly payrolls, the ADP, factory orders, construction spending, plus the trade deficit increased. On the uptick: ISM manufacturing/services, wholesale inventories, consumer credit, plus weekly jobless claims improved. Next week’s reports will be highlighted by industrial production, the CPI/PPI and retail sales.

LONG TERM: downtrend probable

If life were this simple. Notice the MACD crossover to the downside during the beginning of bear markets. Then back up again during the beginning of bull markets.

At the beginning of the bear market we noted we were expecting either a double zigzag or something more complex. We should have left out the “something more complex”. Because that is exactly what we are dealing with right now. Since the October top the SPX has dropped 300, rallied 200, dropped 200, rallied 200, then dropped 200 again. After the initial drop, just a big trading range between 2600 and 2800. Great for day traders. But not so great for EW technicians trying to uncover an overall pattern. Knowing exactly where one is in a bear market makes it easier to identify its ending.

Longer term nothing has changed. Five Intermediate waves up, with a subdividing third wave, from early 2016 to late 2018 to complete a Major wave 1 bull market. After that a Major wave 2 bear market began. So far, despite all the volatility, the SPX has only lost 11.5% from the high. Year over year, however, the market is about 1% lower. The year started at SPX 2674. The ECRI ticked down a notch.

MEDIUM TERM: downtrend

This bear market started off simple enough: a zigzag down to SPX 2604, then an a-b-c rally to SPX 2815. After that it has been a mess to count: -200, +200, -200, +100, -100. But Friday appears to have cleared it all up. What it looks like we are dealing with is an Intermediate wave A taking the form of a double zigzag. First a Minor A zigzag SPX 2941-2603, then Minor B to SPX 2815, now a Minor C zigzag to SPX 2622 thus far. It’s been quite choppy and volatile just like a bear market.

Since Minor A dropped 337 points, Minor C should have some Fibonacci relationship to A before it ends. We see four possibilities: SPX 2607 (0.618), SPX 2577 (0.707), SPX 2550 (0.786) and SPX 2478 (equal). Two of these four fall within OEW pivots: 2577 and 2478. Too early to tell which is likely to work out. But with all the political problems out there, (US, China, Italy, France, Ukraine and the UK), any of these levels are possible.

SHORT TERM

Trying to track this market with short term waves has been a near impossible task. At times this market just seems to bounce between OEW pivots with no identifiable pattern. Minute wave C, of Minor C, had 7 waves down to SPX 2622, 7 waves up to SPX 2709, and now 5 waves down to SPX 2631, (2643-2665-2623-2650-2631). Another 7 wave pattern in the making? Hopefully we will see the end of this downtrend soon. Then we could get a good counter rally uptrend for a while.

Short term support is at the 2632 and 2594 pivots, with resistance at the 2656 and 2731 pivots. Short term momentum ended the week oversold. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower on the week losing 0.9%.

European markets were also mostly lower losing 2.3%.

The DJ World index lost 3.5%, and the NYSE lost 4.1%.

COMMODITIES

Bonds continue to uptrend gaining 1.0% on the week.

Crude appears to be trying to start an uptrend and gained 3.3%.

Gold remains in an uptrend and gained 2.2%.

The USD is still in an uptrend but lost 0.4%.

NEXT WEEK

Tuesday: the PPI. Wednesday: CPI and the budget deficit. Thursday: weekly jobless claims, and export/import prices. Friday: industrial production, capacity utilization, retails sales, and business inventories.

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

Posted in weekend update | Tagged , , , | 733 Comments

Tuesday update

SHORT TERM: gap down opening then slide, DOW -799

During the first two days of the week Asian markets gained 0.5%, and European markets gained 0.6%. The US market started the week at SPX 2760. After a gap up opening to SPX 2800 on Monday the market started to pullback. The pullback continued with today’s gap down opening as the SPX hit 2697. Quite a drop in two days, after a 5 day 169 point rally. Volatility continues.

We had counted five waves up from SPX 2631 to SPX 2800: 2672-2653-(2674-2656-2744-2723)-2754-2733-2800. The parenthesis are the subdivisions of wave 3. Notice all the pullbacks were around 20 points. On Monday the market dropped 27 points after that big gap up opening, suggesting the largest pullback since the SPX 2631 low was now underway. Dropping 103 points in 2 days is large, and swift. We placed a Minor wave A label at the SPX 2800 high, suggesting Minor B is now underway. A 61.8% retracement of the entire rally is at SPX 2696, close to today’s low. When Minor B concludes we expect another rally that should eclipse SPX 2800, then reach 2815 or higher. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum was extremely oversold at the close. Best to your trading!

Tomorrow US markets are closed for a Day of Mourning for POTUS 41.

MEDIUM TERM: uptrend likely

LONG TERM: downtrend probable

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

Posted in Updates | Tagged , , , | 616 Comments

Weekend update

REVIEW

The FED turns dovish and the market rallies. The week started off at SPX 2633. After a gap up opening on Monday the market rallied to SPX 2674. Tuesday had a gap down opening to SPX 2656, but the market reversed and rallied to 2683 by the close. Wednesday had another gap up opening as the market surged to SPX 2744. Thursday another gap down opening, this time to SPX 2723. But the market rallied to SPX 2754 before pulling back into the close. Friday had a quiet open, but rallied to SPX 2761 just before the close. For the week the SPX/DOW gained 5.05%, and the NDX/NAZ gained 6.05%. Economic reports for the week were mixed. On the downtick: Case Shiller, consumer confidence, new/pending home sales, plus weekly jobless claims rose. On the uptick: personal income/spending, the CPI, and the Chicago PMI. Next week’s reports will be highlighted by the Beige book, the payrolls report, and the ISMs. Best to your week!

LONG TERM: downtrend probable

The strong FED induced rally now has a number US indices in confirmed uptrends: TRAN, SOX, R2K, NYSE, HGX, XLB, XLF, XLI, XLP, XLV, and XLU. It might have also contributed to confirmed uptrends in the following foreign indices: Brazil, Canada, China, Hong Kong, India, Japan, Singapore, S. Korea, Spain, and Switzerland. This would suggest that Intermediate wave B is finally underway in the big four US indices. This weeks WROC signal, which sometimes occurs prior to uptrend confirmations, suggests the same. Meanwhile the ECRI continues to slip.

Our long term view remains unchanged. Primary wave I ended in 2015, and Primary wave II ended in 2016. After that Primary wave III was underway. The bull market from 2016-2018 was Major wave 1, of Primary III, and a bear market Major wave 2 should be underway now. Thus far the growth sector has taken the brunt of the selling, down 16% at the low. While the SPX was down 11.5% at its low. Once this potential uptrend concludes the market should decline in an Intermediate wave C to end the bear market.

MEDIUM TERM: uptrend potentially underway

With this weeks strong rally and WROC signal there is a good chance the Int. B uptrend is underway from last Friday’s low. So far we have one wave up and we would expect three, or something more complicated, before the uptrend ends. A normal retracement of Int. A would put the SPX right back around the 2815 area.

B wave retracements, in recent years, have been stronger than normal. This would suggest possibly the 2858 or 2884 pivots. For now let’s take it one pivot at a time. After Int. wave B concludes, Int. wave C should take the market to new lows for the bear market before it ends.

SHORT TERM

The one wave noted above, on a much shorter term basis, is actually nine waves up, and looks impulsive: 2672-2653-2754 (2674-2656-2744-2723-2754)-2733-2761. The waves within the parenthesis are the subdivisions of the third wave. All of the pullbacks during this rally have only been about 20 points.

With five waves up, a negative divergence on the hourly chart, and overbought on the daily chart, it’s possible for a bigger pullback early next week. Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Best to your trading!

FOREIGN MARKETS

Asian markets were nearly all higher on the week for a gain of 1.7%.

European markets were all higher and gained 2.1%.

The DJ World index gained 3.2%, and the NYSE gained 3.5%.

COMMODITIES

Bonds continue to uptrend and gained 0.3%.

Crude remains in a downtrend but gained 1.0%.

Gold remains in a choppy uptrend and lost 0.3%.

The USD is still in an uptrend but lost 0.1%.

NEXT WEEK

Monday: ISM and constructions pending at 10am. Tuesday: auto sales. Wednesday: ADP, ISM services, and the Beige book. Thursday: weekly jobless claims, the trade deficit, and factory orders. Friday: monthly payrolls, consumer sentiment, consumer credit, and wholesale inventories.

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

Posted in weekend update | Tagged , , , | 439 Comments