Weekend update

REVIEW

Very volatile week. The market started the week at SPX 2768. After a gap up opening on Monday, and hitting SPX 2779 in the opening minutes, the market headed south. A gap down opening on Tuesday carried the SPX to 2691 in the first hour of trading. Then the market rallied all the way back to SPX 2754 by the last hour of trading. Wednesday had a quiet open, and then the market sold off to SPX 2652 by the last hour of trading. Then a gap up opening on Thursday carried the SPX all the way back to 2723 in the last hour of trading. Friday’s gap down opening took the market down to an even lower low at SPX 2628. And just as quickly it rallied to SPX 2692. Naturally it headed lower after that and ended the week at SPX 2659. Summary: 2779-2691-2754-2652-2723-2628-2692. For the week the SPX/DOW lost 3.45%, and the NDX/NAZ lost 3.70%. On the economic front, reports were mixed. On the downtick: new home sales, consumer sentiment, plus the trade deficit and weekly jobless claims moved up. On the uptick: Q3 GDP, durable goods and pending home sales. Next week’s reports will be highlighted by monthly Payrolls, ISM and personal income/spending. Best to your week!

LONG TERM: downtrend probable

After months of speculation as to what could cause a downturn in the stock market it has now become quite clear. It is not all the partisan rhetoric coming out of Washington, DC. It is the potential worldwide economic slowdown due to tariffs. The first tariffs initiated by this administration were back in January. Many additional tariffs have followed. Back in January the US market sold off 12%, and all of these market indices topped: China, Germany, Hong Kong, S. Korea, Switzerland, the DJ World index, and the NYSE. Why would the NYSE top with the rest of the world’s indices, and not the US? It’s more of an international index than it is a US index.

During the summer we had been warning that the Asian and European markets looked quite weak. China had already confirmed a bear market, and Switzerland (which usually tops months before the US) had already topped. In fact, all but two of the international markets we follow looked like they had topped. We now have Canada, Germany and Spain, joining China in confirmed bear markets.

While all this was unfolding we kept stating that the US indices needed one more new high to potentially complete the bull market from February 2016. After a six month uptrend the highs occurred in September/October, and then the market confirmed a downtrend a couple of weeks later.

MEDIUM TERM: downtrend

For the past few months we have been noticing a weakening Asia/Europe and a struggling uptrend in the SPX. We noted, historically, the final uptrend of a bull market that struggles usually tops with marginal news highs. The SPX only managed a 2% higher record close, and the DOW a 1%. We had a bull market target of 3000+ in 2018+. Got the year right, but fell short on price by about 2%. Considering the bull market started at SPX 1810, that 2016 target worked out fairly well. Now what?

Before the DOW topped in October the NDX/NAZ had already confirmed downtrends. Joining the numerous downtrends elsewhere. The SPX/DOW confirmed downtrends shortly thereafter. Last weekend we offered several downside targets for this downtrend SPX: 2675, 2656, 2632, 2594 and 2587. The middle three are pivots, and the first/last are Fibonacci calculations. The market then wasted no time heading towards those levels starting on Tuesday.

The first stop was SPX 2691, (not one of the numbers), on Tuesday. That level was the Minor 2 low of the uptrend. After the low a 63-point rally followed on Tuesday. The second stop was SPX 2652 (2656 pivot) on Wednesday. Then the market rallied 71-points (2731 pivot) into Thursday. On the Friday the third stop occurred at SPX 2628 (2632 pivot) then the market rallied 64-points. All three clear identifiable lows were followed by huge 60+ point rallies. Day traders dream activity!

Looking further out. When this downtrend ends it should be followed by an a-b-c uptrend. Then another downtrend that will possibly end the bear market. This would be a somewhat simple a-b-c for Major wave 2. Major wave 2 may also be more complex: abc-x-abc, or a double three. In either case we’re not looking for a bear market low until early 2019.

SHORT TERM

Initially we all thought the market would offer an orderly decline for this wave A downtrend. This week’s activity throws that assumption to the wind. This market is acting like 3%/4% moves mean nothing. The only short term count we can currently offer is on the hourly/daily charts: an a-b-c down. The first decline was 230 points (2941-2711). Then after a bounce to SPX 2817, the current decline is 189 points (2817-2628). About 41 points away from being equal: which is SPX 2587. This also happens to be in the range of the next lower pivot: 2594. If the market continues its 100-points drops, followed by 60+ point rallies, the 2594 pivot could be next and last for now.

Technically the market continues to display positive divergences during these declines. We now have a double positive divergence on the SPX/DOW hourly charts. And positive divergences on all four major indices daily charts. They have not worked thus far, except to set up sharp rallies. But they usually do help identify downtrend lows. Keep an eye on those pivots. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower for the week and lost 3.2%.

European markets were also mostly lower and lost 1.6%.

The DJ World index lost 3.9%, and the NYSE lost 3.5%.

COMMODITIES

Bonds appear to be uptrending and gained 0.9% on the week.

Crude continues to downtrend and lost 2.2%.

Gold is still in an uptrend and gained 0.6%.

The USD also remains in an uptrend and gained 0.7%.

NEXT WEEK

Monday: personal income/spending at 8:30. Tuesday: Case-Shiller and consumer confidence. Wednesday: the ADP and Chicago PMI. Thursday: jobless claims, ISM, construction spending and auto sales. Friday: monthly payrolls, trade deficit and factory orders.

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

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Wednesday update

SHORT TERM: quiet open then selloff, DOW -608

The first three days of the week display Asian stocks down 0.8%, and European stocks down 2.3%. US stocks started the week at SPX 2768. The SPX hit 2779 in the first few minutes after a gap up opening on Monday. Dropped to SPX 2691 on Tuesday, after a gap down opening. Then rallied nearly back to unchanged after being down 65 points. Today a quiet open then the selling resumed, and the SPX made new lows for the downtrend at 2652. Quite a volatile market.

Yesterday we thought the market had a chance to end this downtrend at SPX 2691, after several technical indicators looked positive. The market rallied big off the lows, and we were waiting for some upside follow through today before placing a Minor wave A label at that low. That upside follow through never materialized, and the market dropped right to our SPX 2675 initial target, and then the OEW 2656 pivot in the last hour of trading. Quite a volatile two days.

With today’s selloff the charts now display positive divergences on all timeframes. Naturally we would like to see some upside activity before thinking a significant low has been established. But this is what the RSI usually looks like at downtrend bottoms. Short term support is at 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Day traders markets!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

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Weekend update

REVIEW

The week started at SPX 2767. After a lower open on Monday and a trade down to SPX 2749. The market gapped up on Tuesday, and then hit SPX 2817 midday Wednesday. A gap down opening on Thursday took the SPX down to 2755, where it was trading on Monday. Then a gap up opening on Friday rallied the SPX to 2798 early morning, which was sold off for the rest of the day. For the week the SPX/DOW gained 0.20%, and the NDX/NAZ lost 0.65%. Economic reports for the week were mostly positive. On the downtick: housing starts, building permits, existing home sales, and the Philly FED. On the uptick: leading indicators, the NAHB, industrial production, retail sales, the NY FED, business inventories, plus jobless claims and the federal budget improved. Next week’s reports will be highlighted by the beige book and Q3 GDP. Best to your week!

LONG TERM: downtrend probably underway

Despite a volatile week not much has changed from last weekend’s report. The market traded above last week’s SPX 2711 low, and well below the SPX 2941 all-time high. The range for the week was SPX: 2749-2817. And the SPX gained 1 point for the week.

The SPX weekly chart displays the Major wave 1 bull market count from February 2016 to October 2018. Notice the five wave rise from the Primary II bear market low at SPX 1810, to the Major wave 1 high at SPX 2941. Five Intermediate waves, with five Minor waves creating a subdividing Intermediate wave iii. Intermediate ii was an irregular zigzag, and Intermediate iv was a flat. Minor 2 was complex and Minor 4 was simple. Alternation on every level. Same can be said for the DOW, NDX and NAZ chart patterns. They all mimicked each other, while at times not completely in sync.

MEDIUM TERM: downtrend

While the last uptrend left a lot to be desired as for impulsivity. It was still tracked as Intermediate wave v, and expected to be the last uptrend of the bull market. We had noted months ago. If the uptrend surged it could pass SPX 3000 easily. If the uptrend struggled and took lots of time it would probably make only marginal new highs. The uptrend took six months, and exceeded the previous all-time high by only 2.4%. The DOW only exceeded its high by 1.2%.

Thus far the market has dropped from SPX 2941 to SPX 2711. We had thought that could be an important low, and so far it is holding as such. We labeled that low Minute wave A in dark green on the charts. The rally that followed has thus far risen to SPX 2817 for nearly a 50% retracement. We have labeled that with a tentative light green Minute B. So far the decline is moving along generally as expected.

SHORT TERM

With Minute A SPX 2941-2711 (230 points), and Minute B reaching SPX 2817 (106 points), we would now expect Minute C to decline either 0.618 Minute A (2675), or 1.0 Minute A (2587). There are pivots at 2656, 2632 and 2594. Once the market does hit one of those lows it should end this Minor wave A downtrend. Then we would expect a Minor B uptrend retracing 50% to 61.8% of the entire decline. After that we probably won’t be seeing those levels again for some time as the bear market begins to make itself more widely known. If things really get carried away. Which is possible considering the multiples. The FED will be forced to intervene: MM4ME.

Short term support is at the 2731 and 2656 pivots, with resistance at the 2780 and 2798 pivots. Short term momentum ended the week just above oversold. Best to your trading! It’s a day traders market.

FOREIGN MARKETS

Asian markets were mostly lower for the week for a net loss of 0.7%.

European markets were mixed and gained 0.3%.

The DJ World index lost 0.1%, and the NYSE gained 0.1%.

COMMODITIES

Bonds continue to downtrend and lost 0.2% on the week.

Crude appears to be in a downtrend and lost 3.7% on the week.

Gold remains in an uptrend and gained 0.6%.

The USD is also in an uptrend and gained 0.8%.

NEXT WEEK

Wednesday: new homes sales and the Beige book. Thursday: weekly jobless claims, durable goods, and pending home sales. Friday: Q3 GDP and consumer sentiment.

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

 

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Wednesday update

SHORT TERM: quiet opening then volatility, DOW -92

The first three days of the week have displayed volatile markets worldwide. Asian markets lost 0.3%, and European markets gained 1.2%. Starting the week at SPX 2767, the US market dropped to 2749 Monday morning, chopped around in a 20-point range, then gapped up and rallied to 2813 Tuesday. Today a flat opening led to a nearly 30-point decline, before a recovery and a higher high at 2817.

While it is still very early in what we expect to be a multi-month bear market. We have started labeling some waves. Last week’s decline to SPX 2711 looks like Minute A of a Minor A downtrend. The rally underway off that low should be Minute B, and we have been expecting 2799, 2826, 2853 or just the 2835 pivot range for B. After that we expect the market to decline again in a Minute C to complete Minor A. That wave could bottom around SPX 2677 or the 2658 pivot range. These are all Fibonacci calculations. Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 and 2858 pivots. Short term momentum is displaying a negative divergence at today’s high. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable

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

 

 

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Weekend update

REVIEW

Serious turn of events this week. The week started at SPX 2886. After a gap down opening on Monday the market traded down to SPX 2862. A rally into Tuesday morning turned the SPX (2895) higher for the week. Then after a lower opening on Wednesday the market started to head south in a hurry. After a gap down opening on Thursday the SPX hit 2711. Then it tried to rebound, and even had a huge gap up opening on Friday, to close the week at SPX 2767. For the week the SPX/DOW lost 4.15%, and the NDX/NAZ lost 3.50%. Economic reports for the week mostly positive. On the downtick: consumer sentiment, plus jobless claims moved up. On the uptick: import prices, CPI/PPI, and wholesale inventories. Next week’s reports will be highlighted by: the FOMC minutes, Capacity utilization, the NY/Philly FED, and housing. Best to your options expiration week!

LONG TERM: downtrend probably underway

For the past several months we had been warning that the market was probably in its last uptrend of the 2016 bull market. For the past several weeks we have been noting that the NDX/NAZ wave patterns looked complete, and the SPX/DOW might have a bit more work to do to the upside. This week the Tech sector bear market took control of the general market and everything sold off. Scale in around bear market lows. Scale out around bull market highs.

With the SPX/DOW joining the NDX/NAZ in confirmed downtrends, we can now count five waves up from early-2016. This suggests, as we have been noting the technical deterioration, that the Major wave 1 bull market ended at the recent highs. We are now expecting a shallow 15% to 20% bear market lasting several months into next year. Bear markets are often quite volatile. And a rally back to SPX 2900 at some point would not be a surprise. After the expected Major wave 2 bear market ends, the Primary III secular bull market will resume.

MEDIUM TERM: downtrend

We have noted the NDX/NAZ had been in confirmed downtrends, and probably bear markets, since early October. This week the SPX/DOW joined the growth sector with confirmed downtrends. We had thought the SPX/DOW had a bit more upside to go. Especially with the SPX nearing our 3000+ in 2018+ target, after a 2016 SPX 1810 low. SPX 2941 was the best it could do. Sixty-two percent in about 2.5 years.

With the first downtrend underway of an expected bear market it is a bit difficult to determine, in advance, how this is all going to unfold. In recent years all the selloffs, (2011, 2015/2016, and 2018) have been quite similar. About a 250+ point decline, a 50% retracement, and then a lower low for wave A. In all three cases that was one downtrend. Then an uptrend retracing about 61.8% of that entire decline. This is probably a good general guideline for starters.

SHORT TERM

The one thing we know for sure at this point is that the SPX has completed five waves up from the early-2016 bear market low. And, is now in a confirmed downtrend with the DOW/NDX/NAZ. We can assume the entire decline will correct some portion of the five wave bull market. Works just like a downtrend correcting some portion of the previous 5 wave uptrend. Only this time the five waves was from February 2016 to October 2018.

Thus far the market has dropped from SPX 2941 to 2711, about 230 points. If this is enough for the first rebound. A rally to around the 2835 pivot would appear to be underway. Keep in mind volatility is king right now. The three potential retracements from 2711 are SPX: 2799, 2826 and 2853. Short term support is at 2731 and 2656, with resistance at 2780 and 2798. Short term momentum rose to about neutral after a positive divergence on Thursday. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for a 4.6% loss.

European markets were all lower for a 4.5% loss.

The DJ World index lost 4.3%, and the NYSE lost 3.9%.

COMMODITIES

Bonds continue to downtrend but gained 0.5% on the week.

Crude remains in an uptrend but lost 4.0%.

Gold is in an uptrend and gained 1.4%.

The USD is in an uptrend but lost 0.6%.

NEXT WEEK

Monday: retail sales and NY FED at 8:30, then business inventories at 10am. Tuesday: industrial production and the NAHB. Wednesday: housing starts, building permits and the FOMC minutes. Thursday: jobless claims, Philly FED and leading indicators. Friday: existing home sales and options expiration.

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

 

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Weekend update

REVIEW

Wild week! The SPX started the week at 2914. After a gap up opening Monday, an inside day Tuesday, and another gap up opening on Wednesday, the SPX hit 2940. One point shy of the all-time high. After Wednesday morning’s high it was all downhill from there. By Friday the SPX was trading at 2869. For the week the SPX/DOW lost 0.5%, and the NDX/NAZ lost 3.1%. Economic reports for the week were mostly positive. On the downtick: ISM, monthly payrolls, plus the trade deficit widened. On the uptick: construction spending, auto sales, the ADP, ISM services, factory orders, consumer credit, plus jobless claims and unemployment declined. Next week’s reports will be highlighted by the CPI/PPI and export/import prices. Best to your week!

LONG TERM: uptrend weakening

For the past few weeks we have been noting that the four major indices, (SPX, DOW, NDX, NAZ) not only appear to be in their last uptrend of this bull market. But are also getting close to completing, or in some cases may have completed, that uptrend. We noted last weekend that the NDX/NAZ were already in confirmed downtrends. But the SPX/DOW appeared to have more work to do on the upside before entering their downtrends.

This week the DOW made all-time new highs on two consecutive days, falling less than 50 points short of hitting 27,000 for the first time. The SPX rallied to within one point of its 2941 all-time high before retreating. Yet the TRAN and R2K confirmed downtrends this week. As noted we scale into positions during potential bear market bottoms, and scale out during potential bull market tops. But do your own homework and make your own investment decisions.

MEDIUM TERM: uptrend weakening

We had marked last week that Minor 3 was done at SPX 2941. When the SPX rallied back to 2940, and the DOW was making new highs, for one day we thought Minor 3 might go higher. Then the SPX reversed, along with the rest of the market, and the SPX 2941 level still stands as the Minor 3 high. Minor wave 4, within this Intermediate wave v uptrend, resumed. On Friday the SPX traded down to 2869, for a 72 point drop from the all-time high. We have been projecting Minor wave 4 would drop 60-100 points.

At this point everything seems to fit quite nicely. The SPX displayed daily RSI/MACD divergences at the 2941 Minor wave 3 high. The decline since then has been an a-b-c. With the A wave 38 points and the C wave 71 points thus far. Nearly a 2:1 ratio. Time to start looking for a Minor wave 4 low. Medium term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots.

SHORT TERM

Tricky market lately with all the cross currents. Nothing new for this bull market though. As noted earlier the Minor wave 4 decline displays a C wave nearly double the size of the A wave. Usually a good relationship in a zigzag. The decline has been 72 points, and is within our 60-100 point range. At Friday’s low the daily RSI hit oversold for the first time since Minor wave 2. And Friday’s low was within just a few points of the previous 4th wave at SPX 2864.

Overall this activity looks good for a potential Minor wave 4 low, especially when you add the positive divergence on the hourly chart at the low. Placed a tentative green label at that 2869 low. Short term support is at the 2884 and 2858 pivots, with resistance at the 2929 and 2995 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly lower and lost 2.2%.

European markets were all lower and lost 2.0%.

The DJ World index lost 1.9%, and the NYSE lost 0.7%.

COMMODITIES

Bonds continue to downtrend and lost 1.0%.

Crude remains in an uptrend and gained 1.5%.

Gold is still in a sluggish uptrend and gained 0.8%.

The USD is also in an uptrend and gained 0.7%.

NEXT WEEK

Wednesday: PPI and wholesale inventories. Thursday: weekly jobless claims, the CPI, and the Federal budget. Friday: export/import prices and consumer sentiment. Best to your week!

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

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OEW tutoring

Objective Elliott Wave, (OEW), is a quantitative approach to the Elliott Wave Theory. Once you learn OEW you will be able to quantitatively research the historical price performance of any asset class, or stock, and determine its current position within its overall long term trend. Quantified waves never change. Then using shorter term charts, you will be able to determine good entry and exit price areas in the asset you are tracking.

This is not a course, this is private tutoring: one on one. You may take as long as you like to fully grasp the material, and concepts at hand. It is not complicated. Actually you will be amazed, after some period of time and dedicated study, how easily you will be able to discern the waves as they unfold. OEW quantitatively identifies all the medium and long term waves that create bull and bear markets. Every one! We have been applying this technique, successfully, for thirty-five years.

The lessons also include OEW analysis of long term investor sentiment, the PCE, the Unemployment rate, and the Baltic Dry index. Housing: leading/lagging indicators, what works and what does not. Currencies: tracking the long term currency cycle in OEW terms. How the Saeculum applies to the markets, and Investing/Trading Psychology. In recent years we added an historical evaluation of the FED, how QE impacts the SPX, plus historical comparisons of the SPX/DOW/NAZ. This is our most complete lesson plan yet.

Over the years OEW analysis has led to some important projections in just the stock market alone. We projected the 1987 top and subsequent crash, and called the Dec. 1987 low, the July 1990 top to the day, the 2000 top, and the Oct. 2002 low. Then we called the Oct. 2007 top (in early Jan08), and the Mar. 2009 bear market low nearly to the day. And in mid-2016 the current bull market to new highs.

In Real Estate: OEW confirmed the bear market in 2006, and a new bull market starting in 2011. In Bonds: OEW confirmed the bull market in 2007, then turned long term bearish in 2016. In the Currency markets: OEW projected a strong rally in the USD in early 2008 after a three year decline. Then a resumption of its choppy bear market in 2009/10. We turned bearish on most foreign currencies in mid-2011, then long term bearish on the USD in 2016. In early 2009, OEW projected a resumption of the ongoing 13 year bull market in some Commodities: including Gold and Silver. Then turned long term bearish in 2012.

OEW can be used to track any asset class, including individual stocks, providing there is sufficient historical data. All of my analysis since 2005 are detailed – unedited – day by day on the blog. Bull and bear markets can last for years. Medium term uptrends and downtrends only last for a few 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 also allows one to track a bull or bear market as it unfolds. If you are interested in learning how to do this type of analysis yourself, and joining our private OEW group, just contact me at caldaro@msn.com for details. Best to your trading/investing.

“The possession of knowledge, unless accompanied by the manifestation and expression in sharing is a vain and foolish thing. The Law of Use is universal, and he who violates it suffers by reason of his conflict with natural forces.”

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