The week started at SPX 2579. After a slightly higher open on Monday the market gapped up on Tuesday. The rally continued through Wednesday and Friday, with only a 6 point pullback all week, to reach a new all-time high at SPX 2604. A dip into the close ended the week at SPX 2602. For the week the SPX/DOW gained 0.9%, and the NDX/NAZ gained 1.55%. Economic reports for the week were mixed. On the downtick: durable goods and consumer sentiment. On the uptick: leading indicators, existing home sales and weekly jobless claims improved. Next week’s reports include Q3 GDP and the FED’s Beige book. Best to your week!
LONG TERM: uptrend
The long-term bull market count remains unchanged since its early beginnings. A Major wave 1 bull market, consisting of five Intermediate waves, is underway. Intermediate waves i and ii ended in the spring of 2016. Intermediate wave iii, as is often the case, then divided into five Minor waves. Minor waves 1 and 2 ended in the fall of 2016, and Minor waves 3 and 4 ended in the spring of 2017. An extended Minor wave 5 has been underway since then.
When Minor 5 does end, it will also end Intermediate wave iii. Then an Intermediate wave iv correction will follow. After that Intermediate wave v will take the market to all-time new highs. The bull market appears to have quite a way to go in time and price.
MEDIUM TERM: uptrend
The market has been experiencing its longest uptrend since 2006/2007: seven months. It has been quite long as far as uptrends go, and quite complex. While the market continues to make new highs, extending the uptrend, we are seeing a three-fold Fibonacci area that could offer significant resistance in the days/weeks ahead to end the uptrend.
Normally a cluster of OEW pivots is all that is required to end an uptrend. The cluster just ahead is OEW 2632, 2646 and 2656. Another resistance area that fits into this analysis, is the length of previous uptrends within the bull market. From the February 2016 low the two largest uptrends have been 301 points and 317 points. This gives us a resistance range of SPX 2630-2646. The third resistance area has to do with the internals of the uptrend. The three rising Minute waves all divided into five Micro waves. Minute i’s three rising Micro waves: 77-93-43, and Minute iii’s three rising Micro waves: 83-161-53. Notice the last wave in each sequence ended between 0.56% and 0.64% of the first wave. When we look at the uptrend as a whole, since Minute v is not likely to offer all these Micro wave subdivisions, we have: 125-189-xxxx. Using the same percentage relationships, the last wave between 0.56% and 0.64% of the first, we arrive with this range SPX 2627-2637. Notice all three ranges overlap in the SPX 2630’s. Should this area end the uptrend and Intermediate wave iii. The likely decline for an Intermediate wave iv correction is 70-100 SPX points.
After completing Minute waves i and ii in June/July, Minute waves iii and iv in November, Minute wave v has been underway since the SPX 2557 low. Thus far we can count three waves up from that low: 2590-2578-2604. These waves may be of Pico or Nano degree. But the analysis above suggests they could be of Micro degree as well. Let’s see what the market looks like technically, when it reaches the OEW 2632 pivot range.
Short term support is at the 2594 and 2575 pivots, with resistance at the 2632 and 2646 pivots. Short term momentum is displaying a negative divergence, but no pullback in price as of yet. Best to your trading in the coming week!
Asian markets were mostly higher on the week for a net 0.9% gain.
European markets were all higher on the week and gained 0.9% as well.
The DJ World index gained 1.3%, and the NYSE gained 1.0%.
Bonds are trying to establish an uptrend and ended flat on the week.
Crude remains in an uptrend and gained 4.0%.
Gold remains in a downtrend and lost 0.7%.
The USD is now in a downtrend and lost 0.5% on the week.
Monday: new home sales at 10am. Tuesday: Case-Shiller, and FED chair nomination hearing for FED governor Powell. Wednesday: Q3 GDP (est. 3.0%), pending home sales, the Beige book, and economic outlook testimony from FED chair Yellen . Thursday: weekly jobless claims, personal income/spending, and the Chicago PMI. Friday: ISM , construction spending, and auto sales.