Friday update

SHORT TERM: higher open rally stalls, DOW -5

Overnight the Asian markets gained 0.4%. Europe opened higher and gained 0.9%. US index futures were higher overnight. At 8:30 the PPI was reported higher: 0.3% v 0.4%, and retail sales were reported higher: 0.6% v 0.1%. The market opened 5 points above yesterday’s SPX 2270 close, then rose to 2279 in the opening minutes. At 10am business inventories were reported higher: 0.7% v -0.2%, and consumer sentiment was reported lower: 98.1 v 98.2. The market then started to pullback. Around 2:30 the SPX hit 2272, then bounced to close at 2275.

For the day the SPX/DOW were mixed, and the NDX/NAZ gained 0.40%. Bonds lost 7 ticks, Crude slid 50 cents, Gold rose $3, and the USD was lower. Medium term support is at the 2270 and 2212 pivots, with resistance at the 2286 and 2321 pivots. Today the WLEI was reported higher: 62.2 v 62.0, and the Q4 GDP estimate was lowered: 2.8% v 2.9%.

The market opened higher today, rallied to SPX 2279 in the opening minutes, then drifted lower for the rest of the day. Another Monday holiday ahead, third one in 4 weeks, probably the cause for the drifting. Today’s high, however, did reach Tuesday’s SPX 2279 high, suggesting yesterday’s SPX 2254 low could have ended a small wave decline from SPX 2282. Overall the market pattern still looks choppy, and the weekend update will cover two possible scenarios. Best to your three-day weekend!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Thursday update

SHORT TERM: choppy activity continues, DOW -63

Overnight the Asian markets lost 0.5%. Europe opened lower and lost 0.5% as well. US index futures were lower overnight too. At 8:30 weekly jobless claims were reported higher: 247K v 235K, and export (0.4% v 0.2%)/import prices (-0.2% v -0.1%) were reported mixed. The market opened 7 points below yesterday’s SPX 2275 close and continued to decline. Around 11am the SPX hit its lowest level in more than a week at 2254. After that the market started to rally. The rally continued throughout the afternoon, and the SPX hit 2272 just before a 2270 close.

For the day the SPX/DOW lost 0.25%, and the NDX/NAZ lost 0.25%. Bonds gained 4 ticks, Crude rose 80 cents, Gold rallied $4, and the USD was lower. Medium term support drops back to the 2212 and 2177 pivots, with resistance at the 2270 and 2286 pivots. Tomorrow: the PPI and retail sales (est. +0.8% v 0.1%)  at 8:30, then business inventories and consumer sentiment at 10am.

The market opened to the downside and continued to decline until hitting SPX 2254. After finding support there it rallied all the way back into the SPX 2270’s. Day traders delight. As noted yesterday we continue to observe declining highs and lows since the SPX 2282 all-time high. Not exactly what one would expect to see in a rising fifth wave. Unless of course, that fifth wave has concluded and the market is now in pullback/correction mode. This market needs a breakout soon, or it is likely headed for another 5% correction. Short term support is now at SPX 2254 and SPX 2245, with resistance at the 2270 and 2286 pivots. Short term momentum rose from oversold early to just above neutral. Trade what’s in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Wednesday update

SHORT TERM: choppy activity continues, DOW +99

Overnight the Asian markets gained 0.7%. Europe opened lower but gained 0.3%. US index futures were relatively flat overnight and the SPX opened 1 point below yesterday’s 2269 close. Right after the open the market rose to SPX 2275 just before 11am. Then the market started to selloff when Trump made some negative comments on drug prices during his press conference. By 11:30 the SPX hit 2261. Then after a rebound to SPX 2273 around noon, a retest of 2261 occurred at 1:30. Then the market rallied into a SPX 2275 close.

For the day the SPX/DOW gained 0.40%, and the NDX/NAZ gained 0.25%. Bonds added 2 ticks, Crude rose $1.45, Gold added $4, and the USD was lower. Medium term support rises to the 2270 and 2212 pivots, with resistance at the 2286 and 2321 pivots. Tomorrow: export/import prices and weekly jobless claims at 8:30, then the budget deficit at 2pm.

The market opened flat today, bounced, dropped to SPX 2261, bounced, and then retested 2261 before rising in the afternoon. As noted yesterday’s the price action in the market has remained choppy for some time now, as the DOW has struggled with 20K and the SPX with the 2270/2286 pivots. Yesterday looked like it could have been a pivotal day, with the sudden SPX reversal after hitting 2279. Today the choppiness started displaying a negative slant, as the highs/lows are becoming lower and lower. From last week’s SPX 2282 all-time high the waves have slanted downward: 2265-2279-2261-2273-2261-2275. Today we updated the hourly/daily charts to display a possible uptrend high at SPX 2282, and noted a negative divergence in the daily MACD which is similar to previous uptrend highs. Unless the market can manage to clear the 2286 pivot, a downtrend could be underway. Short term support is now at the 2270 pivot and SPX 2261, with resistance still at the 2286 and 2321 pivots. Short term momentum hit oversold at today’s low then bounced to nearly overbought. Trade what’s in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Tuesday update

SHORT TERM: choppy day, DOW -32

Overnight the Asian markets gained 0.2%. Europe opened higher and gained 0.2% as well. US index futures were slightly lower overnight, and the market opened 2 points below yesterday’s SPX 2269 close. By 10am, when wholesale inventories were reported higher: 1.0% v -0.4%, the SPX hit 2265 and started to rally. The rally continued until 12:30 when the SPX hit 2279 – just 3 points short of its all-time high. Then it started to pullback. The pullback went back to SPX 2269 by 2pm, bounced to 2274 by 3:30, then ended the day at 2269 again.

For the day the SPX/DOW were mixed, and the NDX/NAZ gained 0.30%. Bonds lost 1 tick, Crude dropped $1.15, Gold added $5, and the USD was higher. Medium term support remains at the 2212 and 2177 pivots, with resistance at the 2270 and 2286 pivots.

Today could have been a pivotal day for this uptrend, as it continues to lose upside momentum. On December 13th the SPX entered the 2270/2286 pivot zone for the first time when reaching 2278. Since then it has only managed one higher high at SPX 2282 in nearly one month. On December 14th the DOW neared the 20K area for the first time when reaching 19,966. Since then it has made three more attempts to clear 20K, which have all fallen just short. The action in the DOW in recent days has turned choppy, while the SPX displays four waves from SPX 2234: 2264-2245-2282-2265 and 2279 so far. After reaching SPX 2279 today the market declined 10 points. Not exactly what one would have expected, at this stage of the uptrend, if the SPX was impulsing higher. This uptrend has clearly stalled even from a wave count perspective. Unless the market breaks out soon, a large pullback or even a 5% correction may be next. Short term support is at SPX 2265 and SPX 2245, with resistance at the 2270 and 2286 pivots. Short term momentum nearly hit overbought, after being quite oversold yesterday. then ended below neutral. Trade what’s in front of you!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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Monday update

SHORT TERM: pullback/consolidation, DOW -76

Overnight the Asian markets gained 0.1%. Europe opened lower and lost 0.1%. US index futures were lower overnight, and the SPX opened 3 points below Friday’s 2277 close. In the opening minutes the SPX dropped to 2269, then rallied to 2275 by 11:30. Then it started to drift back down again. At 3pm consumer credit was reported higher: $25.0B v $16.0B. Heading into the close the SPX hit 2269  again and closed there.

For the day the SPX/DOW lost 0.35%, and the NDX/NAZ gained 0.30%. Bonds gained 12 ticks, Crude dropped $2.10, Gold rallied $9, and the USD was lower. Medium term support slips to the 2212 and 2177 pivots, with resistance at the 2270 and 2286 pivots. Tomorrow: wholesale inventories at 10am.

The market opened lower today after Friday’s record close. Hit SPX 2269 in the opening minutes, bounced, remained slightly above that level for most of the day, then closed there. The 4% decline in Crude, which is similar to the first day of last week, pressured the SPX/DOW, while the NDX/NAZ made new all-time highs. Mixed market today. We continue to count three waves up from the recent SPX 2234 low: 2264-2245-2282, with a possible fourth underway. Hourly and daily counts posted this weekend remain unchanged. Short term support is at SPX 2245 and SPX 2234, with resistance at the 2270 and 2286 pivots. Short term momentum dropped from quite overbought to oversold today. Best to your trading!

MEDIUM TERM: uptrend

LONG TERM: uptrend

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

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weekend update

REVIEW

The week started on Tuesday at SPX 2239. The market gapped up to start the week, hit SPX 2264, sold off to 2245, then gapped up on Wednesday to hit 2273. Thursday the market pulled back to SPX 2260. Then on Friday the SPX made all-time new highs at 2282. For the week the SPX/DOW gained 1.45%, and the NDX/NAZ gained 2.95%. Economic reports for the week were slightly positive. On the downtick: the ADP, monthly payrolls, unemployment, factory orders, plus the trade deficit increased. On the uptick: construction spending, ISM manufacturing, auto sales, the WLEI, the Q4 GDP estimate, plus weekly jobless claims declined. Next week’s reports will be highlighted by retail sales, business/wholesale inventories and consumer credit.

SOFT COMMODITIES

As noted in the last report on Gold, commodities move in approximate 30-year cycles: 10 years up and 20 years down. Commodity peaks, in the last century, occurred in 1920, 1951, 1980 and 2011. While most commodities track this cycle quite well, soft commodities such as Corn, Soybeans, Cotton, etc. can deviate somewhat due to weather conditions and government price fixing.

1cotton

The price of Cotton, over the last century, has generally followed the 30-year commodity cycle. Peaks have occurred within a year or so of commodity cycle peaks, with weather related price spikes in between. These price spikes would make it difficult to uncover a long-term cycle, but they are actually an harmonic within the larger cycle.

A closer look at Cotton from 1970-present displays the 30-year cycle noted in black numbers, and the harmonics of this cycle are noted in blue and green numbers. As you will observe even the harmonics have a pattern. Cotton was in a cyclical bull market from 1970-1980, and from 2001-2011 – which matched Gold’s cycle perfectly. In between, a cyclical bear market unfolded from 1980-2001. Cotton is currently in another cyclical bear market, which should bottom within a year, or so, of the year 2031.

The first harmonic, or sub-cycle, is simply 10-years up then 6-years down and is noted in blue: 1970-1980, 1986, 1986-1995, 2001, 2001-2011. Notice it is aligned with the 10-year bull market, and displays about a 10-year rise in the middle of the 20-year bear market. Since Cotton peaked in the year 2011, this suggests a tradable low in the year 2017.

cotton

The second harmonic applies only to the price action of the 10-year advances within the first harmonic. After every 6-year low there is a spike in price lasting 2-3 years, followed by a steep decline. Then the bull phase resumes. Notice the three spikes off the 6-year lows: 1970-1973, 1986-1988, and 2001-2003. This suggests once the 2017 low is in for Cotton it should have a price spike lasting 2-3 years.

soybean

Each of the soft commodities should have peaks and lows within about one year of the general 30-year cycle, and the harmonics previously noted. Each individual commodity should be tracked to determine its own specific turn dates. The Soybean chart above provides an example of the possible date offsets. Hope this helps those inclined to trade the Softs.

LONG TERM: uptrend

An interesting first week to start the year. Unlike last year, when the market gapped down to start the year and then followed Crude in its waterfall decline to $26. This year the market started with two gap up openings and ended each day higher than where it opened. The NYSE finally made a bona fide new high, five months after the NDX/NAZ and six months after the SPX/DOW. This along with another tidbit of data, that we cannot disclose, confirms what we have suspected for most of this year. The NYSE has become an international index, that is NOT representative of the US stock market. The last hope for a quantified Primary V is now gone. As a result we have dropped the NYSE charts to the bottom of the second page in stock charts.

spxweekly

In addition to giving consideration to a potential Primary V, in the first half of the year, we also considered a potential Major B wave advance. This second pattern suggested a potential corrective rise to new all-time highs that could unfold in a diagonal triangle or a double zigzag. We have all these counts posted on the NYSE charts. The overall action in the DOW and NAZ totally eliminates any sort of diagonal triangle scenario. There simply isn’t any rising triangular formation underway. The last potential bearish scenario, a double zigzag B wave, will be eliminated when the SPX exceeds 2336. Thus far this potential pattern is still possible.

With the Primary V and diagonal triangle Major B now out of the way we can continue to concentrate on the Primary III bull market at hand. As labeled on the chart above. A Primary I bull market unfolded from 2009 at SPX 667 to 2015 at SPX 2135. Then a brief Primary II bear market unfolded bottoming in 2016 at SPX 1810. Since then the SPX has been in a Primary III bull market, which is still in its early stages. Our initial target, after SPX 2336 is cleared, is SPX 3000+ by 2018-2020.

MEDIUM TERM: uptrend

Primary III has thus far unfolded in three impulsive uptrends: Feb-Apr, Jun-Aug, and Nov-Jan. We have labeled these three uptrends as: Int. i and ii, Minor 1 and 2, and possibly Minor 3 underway. The first uptrend advanced about 300 pts. over 2 months, the second uptrend about 200 pts. over 2 months, and this third uptrend is about 200 pts. over 2 months. The downtrends have declined about 100 pts. each over 2-3 months. Thus far the trends have been quite consistent.

While these trends have been unfolding we have been trying to hone in on this bull market’s internal characteristics – the wave activity within the trends. We had observed one view, added another view, then recently expanded it to a few more, and now have contracted it back to two again. The newer view will be discussed in this section. And the older view, which most have followed, in the short term section below.

spxdaily

Since Int. i was about 300 pts. and Minor wave 1 about 200 pts., we have been expecting Minor wave 3 to be around 300 pts. Thereby giving it an upside target in the SPX 2380’s. Third waves are almost always longer than first waves. At last month’s SPX 2278 high we could count five waves up from the Minor 2 downtrend low at SPX 2084: 2147-2125-2214-2187-2278. After that high the market had its largest pullback since the uptrend began: 44 pts. versus 22 and 27 pts. This 44 pt. pullback also retraced about 23.6% of the entire uptrend. After that SPX 2234 low a week ago Friday the market rallied to new highs just yesterday at SPX 2282. This view suggests Minute wave i, of Minor 3, ended at SPX 2278. Minute wave ii ended at SPX 2234. And Minute iii is currently underway. This is quite a bullish count, and has a qualifier noted below. Medium term support is at the 2270 and 2212 pivots, with resistance at the 2286 and 2321 pivots.

SHORT TERM

The older version of this bull market’s characteristics everyone should be familiar with, as the counts have been posted on the hourly charts for some time. This version suggests this uptrend has already completed four Minute waves with the fifth underway: 2214-2187-2278-2234-2282 thus far. Should this count be correct, the wave degrees will probably be downgraded one degree since this uptrend is probably not all of Minor 3.

spxhourly

The characteristics of this count display a third wave that is shorter than the first. This of course implies the fifth wave has to be the shortest of three waves. This limits the upside potential for this uptrend to between SPX: 2279 and 2325. And herein lies the qualifier for these two counts. Should the uptrend end within the above range, then the correct count is posted on the hourly chart. Should the uptrend continue beyond SPX 2325, then the correct count is posted on the daily chart. Interesting juncture! Short term support is at the 2270 pivot and SPX 2245, with resistance at the 2286 and 2321 pivots. Short term momentum ended the week overbought. Best to your 2017 trading!

FOREIGN MARKETS

Asian markets were all higher on the week for a net gain of 1.8%.

European markets were also all higher and gained 1.6%.

The DJ World index gained 1.8%.

COMMODITIES

Bonds may be starting an uptrend and gained 0.3% on the week.

Crude remains in an uptrend and gained 0.5%.

Gold is also in an uptrend and gained 1.8%.

The USD may be entering a downtrend and lost 0.1%.

NEXT WEEK

Monday: consumer credit at 3pm. Tuesday: wholesale inventories. Thursday: export/import prices, weekly jobless claims and the budget deficit. Friday: the PPI, retail sales, business inventories and consumer sentiment.

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

Posted in special report, weekend update | Tagged , , , | 146 Comments

OEW tutoring

All markets are driven by long term investor psychology cycles. When the cycle is positive a bull market unfolds, when negative a bear market. The Objective Elliott Wave (OEW) technique not only determines if a market is bullish or bearish, it also determines how far a market has progressed in its current cycle.

OEW is not textbook Elliott Wave. It is a proprietary technique that defines every significant wave within bull and bear markets quantitatively. With this approach one could historically analyze any market to define its most probable wave structure, and determine what the past is projecting about the future. We first uncovered this technique in the early 1980’s when doing an analysis of the entire history of the US stock market. When waves are determined quantitatively they never change, past or present.

At that time our analysis led us to believe that a stock market crash was likely in late-1987 to early-1988. Then another bull market would be underway. When the stock market did crash in October 1987, and a new bull market began in late-1987, we knew we had uncovered some of the missing tenets of the Elliott Wave Theory.

Over the decades OEW analysis has led to some important projections in a variety of markets. In the US stock market: the correction in 1990, the correction in 1998, the 2000-2002 bear market, the 2002-2007 bull market, the 2007-2009 bear market, then the 2009-2115 bull market as well. OEW pinpointed the bull market high in Crude at $148 in 2008. Identified a new bear market in Gold not too far from its 2011 $1900 high. In currencies: OEW tracked the bear market in the USD until 2011, then signaled a new bull market in the USD and bear markets in most other currencies. In real estate: OEW identified the bull market top in 2005, and then the bear market bottom in 2011. All of our projections since the year 2005 are detailed – unedited – day by day on this blog.

Bull and bear markets usually last for years. Uptrends and downtrends last for months, and are often mistaken for changes in long term trends. OEW analysis not only confirms when changes in long term trends are occurring, but often projects them ahead of time. Allowing one to follow the bull or bear market as its unfolds. OEW tutoring covers the various indices in the US stock market and foreign markets, along with various modified technical indicators. It also covers currencies, bonds, commodities, housing, long term asset cycles and the Saeculum. If you are interested in learning how to do this type of analysis yourself, and joining our private international OEW group, please contact us at caldaro@msn.com for details. Best to your trading/investing.

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