Provided by the OEW Group
November 23, 2019
The SPX started the week quietly at 3118 and ended the day at 3122, little changed from last weeks close at 3120. Tuesday had a gap up opening at 3128, but quickly reversed down to 3115 before a rally back and a close at 3120. On Wednesday, the index started with a gap down to 3114, closed the gap except of one point, and then made its weekly low at 3091, all in the first two and a half hours. After that, it rallied for the rest of the day and finished at 3108. Thursday was a flat with a close at 3104. Friday opened a bit higher at 3111, travelled within 10 points and ended the week at 3110.
SPX/DOW lost 0.33%/0.46% while NDX/NAZ lost 0.25%/0.52% this week.
On the economic front, weekly unemployment claims were kept at 227K, somewhat worse than the forecasted 218K. Existing home sales were up to 5.46m but missed the forecast of 5.47m. Both, Manufacturing and Service PMI continued to expand at 52.2 / 51.6 respectively, and the Consumer Sentiment Index beat expectation at 96.8 vs 95.7.
LONG TERM: early stages of a breakout
In the US, the long-term count remains unchanged with the Super Cycle SC2 low in March 2009. The Primary wave I high occurred in May 2015 and the Primary wave II low in February 2016. Primary wave III has been underway ever since and the Major wave 1 high of Primary wave III occurred in October 2018. Our preferred long-term count is posted on the SPX chart, which reflects that Intermediate wave i of Major wave 3 is underway from the Major wave 2 low in December 2018 and continues to subdivide into Minor, Minute and now Micro waves. A breakout above the September Micro 1 high at 3020 has occurred. We are bullish as long as the 2950 level provides support going forward.
However, the DOW all time high last week has not eliminated the alternate count, which can be found in the public chart list.
MEDIUM TERM: uptrend
SPX extended the rally to reach another all-time high at 3128 by Tuesday morning, then reversed with a 37 point pullback on Wednesday to a low of 3091, before consolidating to end the week at 3110. We previously established Micro wave 2 complete at the 2856 low in early October. Micro wave 3 is now ongoing for nearly two months and likely to extend into December. The pullback this week was the largest since Nano wave ii and was sufficient to qualify another medium term subdivision. Consequently we’ve updated our count to reflect Nano wave iii complete at 3128. This gives us two qualified pullbacks for this uptrend of 67 and 37 points and a very nice impulsive structure with a large third wave. Our nominal target for Micro wave 3 is unchanged at 3180, which fits nicely with the current wave structure. It would not be surprising for the recent pullback to extend lower in the range of 60-70 points or so. A much larger decline back to overlap 3022 would be concerning and suggest something else may be in play. Minute wave iii is now beginning to exceed the length of Minute wave i, which suggests 3300 is in reach by early next year.
Not much to add here, as the short term count tracks closely with the medium term subdivisions as discussed in the previous section. Nano wave i = 2960, Nano wave ii = 2893 and Nano wave iii = 3128. Nano wave iv is now ongoing with a retest or extension of the 3091 low still possible. This week set up a negative divergence at the high from an overbought condition, which preceded the Nano wave iv decline. A rally back above 3128 will suggest Nano wave iv is complete. A possible short term target for extension lower would be Nano wave iv = Nano wave ii, which gives another 30 points down to 2961 and right in the next lower pivot range. We’ll just have to wait and see what the market decides.
Short term support is at the 3105 and 3056 pivots, and resistance is at the 3121 and 3156 pivots.
Asian markets (using AAXJ as a proxy) lost 0.43%.
European markets (using FEZ as a proxy) lost 0.70%.
The Dow Jones Global index (DJW) lost 0.40%, and the NYSE lost 0.39%.
Bonds (UST) are in a downtrend, but gained 0.32%
Crude oil (WTIC) is in a downtrend, but gained 0.09%
Gold is in a downtrend, and lost 0.33%
The USD is in a downtrend but gained 0.31%.
GBTC (Bitcoin) is in a downtrend and lost 16.99%.
Have a good week!