tuesday update
SHORT TERM: uptrend makes new high then pulls back, DOW +12
Overnight the Asian markets were mixed. Europe opened lower and then closed mixed. US index futures traded lower overnight, and the market opened at SPX 1135. From the opening bell, however, the market started to rally. The rally continued until 1:30 when the SPX hit 1145, a new uptrend high. After that there was a fairly sharp pullback to SPX 1138 by 3:30, and the SPX closed at 1140.
For the day the SPX/DOW were +0.15%, and the NDX/NAZ were +0.45%. Bonds lost 1 tick, Crude was flat, Gold slipped $2.00 and the USD was higher. Support for the SPX remains at 1133 and then 1107, with resistance at 1168 and then 1179. Short term momentum was at neutral this morning, rallied to overbought, and then ended at neutral. Tomorrow, Wholesale inventories at 10:00, then the Budget deficit at 2:00.
The rally today was fairly broadbased and the market moved higher despite the USD being higher all day. The NDX/NAZ made new Mar 09 highs, along with the WLSH and the R2K. There was a short term negative divergence at the highs which may lead to further weakness tomorrow. Thus far, this rally still looks like a wave one up from the SPX 1045 low. And it is within five points of completely retracing the 1150 to 1045 downtrend. This market is certainly not looking bearish at this time. Best to your trading!
MEDIUM TERM: uptrend new high at SPX 1145
LONG TERM: bear/bull inflection point almost resolved
monday update
SHORT TERM: SPX clears 1133 pivot in quiet trading, DOW -14
Overnight all the Asian market were higher, and all are in uptrends. Europe opened higher but closed mixed. US index futures were relatively flat overnight and the market opened flat as well. Within the first few minutes, however, the SPX traded to 1141 clearing the OEW 1133 pivot. That after we had a pullback to 1137 by 11:30 and then the market tried to rally. At 2:00 the SPX had only risen to 1140. Then it stayed in a narrow range for the rest of the day to close at 1139.
For the day the SPX/DOW were -0.10%, and the NDX/NAZ were +0.20%. Bonds lost 6 ticks, Crude added 25 cents, Gold dropped $13.00, and the USD was flat. Support for the SPX remains at 1133 and then 1107, with resistance at 1168 and then 1179. Short term momentum eased back some after being quite overbought on friday. Nothing scheduled on the economic calendar tomorrow.
With the SPX clearing the OEW 1133 pivot the next resistance is at the 1168 pivot. Certainly this market is likely to experience some resistance at it nears the previous uptrend high at SPX 1150. Foreign markets did quite well overnight, and we now have thirteen of the fourteen country indices we follow in uptrends. We continue to maintain four separate counts one on each of the four US indices. The DOW/NDX are basically the same bullish counts with a slight difference in wave degree. The SPX bearish count will fail, when and if, the SPX exceeds 1150. The NAZ bearish count is the 1937-1942 scenario. This will need lots of time to unfold. Overall, despite all these counts, we do not see new lows (SPX 667) nor new highs (SPX 1576) in the near future. This market is basically in a trading range, as it usually is during a commodity bull market. This range is likely to continue until after that bull market ends in 2014. Currently, probabilities suggest we are in an equity bull market simliar to 1942-1946 and 1974-1976. The chart below should give a clearer long term picture. Best to your trading!
MEDIUM TERM: uptrend new high at SPX 1141
LONG TERM: bear/bull inflection point favoring bulls
weekend update
REVIEW
After a mixed to somewhat lower end of february, march started off like a lion. New uptrends were confirmed in twelve of the fourteen country stock indices we follow. In the USA economic reports came in mixed, in line with the results of the FED's beige book. On the downside ISM manufacturing, construction spending and auto sales were lower, along with continuing job losses in the ADP and Payrolls reports. On a positive note personal income/spending/credit were on the plus side, along with ISM services, factory orders and the weekly jobless claims improved. For the week the SPX/DOW were +2.70%, and the NDX/NAZ were +3.85%. Bonds were -0.3%, Crude gained 2.7%, Gold added 1.5% and the USD was +0.1%. Asian markets gained 1.7%, Europe gained 4.7% and the Commodity group gained 5.0%. Next week's economic reports revolve around the twin deficits and retail sales.
LONG TERM: the battle at the bear/bull inflection point continues
From the early part of Jan 08 we had remained long term bearish on this market because of either a Cycle wave completion, or a Supercycle wave completion from 1932-2007. We tracked the waves during the bear market from Oct 07 SPX 1576 to Mar 09 SPX 667. At that point, and within days of the low, we recognized a completed 5-3-5 zigzag pattern and projected a 50% bear market retracement rally from SPX 667 to over SPX 1100. In early Dec 09 we had noted a confluence of technical indicators all signalling an important Jan 10 top in the SPX 1160's area. The rally reached SPX 1150 in Jan 10 and then entered a downtrend.
While that medium term uptrend was concluding OEW triggered a quantitative long term uptrend. These types of uptrends usually indicate that a bull market is underway. Historically, however, about 30% of the time they occur during large bear market rallies. Despite the fact that this market had done just about everything we expected over the past two years. This OEW long term uptrend forced a general review, of all documented historical market activity and some preconceived notions of the larger cycles going back a few centuries. While this review was underway, we suggested that the downtrend that started in Jan 10 should be impulsive to confirm the continuation of the bear market scenario. As the downtrend unfolded we tracked the waves. They did look impulsive on the hourly charts, but did not look impulsive on the OEW charts. We also noted that when the SPX/DOW were making the february lows they had both lost about 9% of their market value. During the previous bull market, between 2003 and 2007 the DOW never lost more than 10% of its value during corrections. And, the Jun-July 09 correction was less than 10% as well. I was alerted that term used to describe this type of activity is dirigisme, i.e. a managed market for a managed economy.
The market then held that Feb 5th low at SPX 1045 and started to move higher. When the SPX fully retraced the second decline 1105 to 1045, the only wave pattern that appeared obvious from the SPX 1150 top to the 1045 low was a zigzag. We offered some less obvious bearish SPX counts to complement the bullish zigzag scenario which we posted on the DOW charts. While we maintained the bear market count of the SPX, we also maintained bullish counts on the DOW, NDX, NAZ, plus numerous other indices. This monday we updated the SPX, DOW, NDX and NAZ charts to display four potential counts. On tuesday we detailed the reasons for the different counts, and noted we favored the bullish counts on the DOW/NDX.
Our lengthy review of the Supercycle and Grand Supercycle, posted on the blog, resulted in a much more bullish long term view than anticipated. When new uptrends were confirmed after identical corrections in both Jun-July and Jan-Feb. This market started to look a lot more bullish than bearish. The SPX/DOW still need to make new Mar 09 highs in the days and weeks ahead to help confirm a bull market. Yet, the Nasdaq NAZ already accomplished this on friday. It has five waves up from the Mar 09 low with alternation between the uptrends. This is a classic bull market pattern.
MEDIUM TERM: uptrend high SPX 1139
As we enter the second week of March several OEW parameters are certain. The market is in a long term uptrend. Twelve of the fourteen country indices we follow are in uptrends, Japan and Spain are the exceptions. The US markets have completed four waves from the Mar 09 low, and are now in the fifth. Should the SPX/DOW make new highs, SPX only 11 points away and DOW about 160 points, we'll have five waves up from the Mar 09 low. This is certainly not a bear market pattern. Bear markets, and bear market rallies, always unfold in three waves. When we observe that the NAZ and R2K have already made new Mar 09 highs. Indicating this uptrend is broadbased, these are large indices. Probabilities favor that this bear/bull inflection point will resolve with a bullish outcome.
The recent downtrend, SPX 1150-1045, lasted only thirteen trading days and was clearly corrective. This uptrend is already nineteen days old, it looks impulsive, and the market appears to be in just the first wave up. While we did not observe the thrust up of the first two uptrends. Yet, this rally has made steady progress from the SPX 1045 low. The count posted on the DOW charts displays the preferred bullish count. The DOW hourly chart displays the preferred short term count. It would appear this uptrend has a lot more to go on the upside before it concludes.
In the year 1932, the stock market launched a reflation bull market advance while the economy was in a lingering depression. In technical terms, that bull market placed the low of the GSC in 1932. The economy, for most, continued to be depressionary until WW II. It would appear, at this point, that another reflationary cycle has begun from the Mar 09 SC low. For most, the economy has not improved this time either. Stock markets, historically, recover a lot faster than economies.
SHORT TERM
Support for the SPX notches up to 1133 and then 1107, with resistance at 1168 and then 1179. Short term momentum is quite overbought. Our short term DOW count suggests that this rally should be getting close to completing Minor wave 3. The entire rally from the february low appears to be only in Intermediate wave one of Major wave 3. However, we continue to stress that the OEW 1133 pivot remains key to the bear/bull scenario. A break through on the upside suggests new highs ahead. The next pivot is at 1168. A break through the 1107 pivot on the downside would suggest downside momentum has resumed. Best to your trading!
FOREIGN MARKETS
The Asian markets were up 1.7% on the week. China and Hong Kong lagged, and Japan has yet to confirm an uptrend.
The European markets were up 4.7% on the week. Only Switzerland lagged, and Spain has yet to confirm an uptrend.
The Commodity equity markets were up 5.0% on the week. Russia stormed ahead +8.5%, and all are in confirmed uptrends.
COMMODITIES
Bonds were quiet for most of the week, and selling on friday ended the week -0.3%.
Crude confirmed an uptrend this week and gained 2.7%.
Gold confirmed an uptrend this week gaining 1.5%. Silver continues to lead +5.4%.
The USD has been a non-factor on the equity/commodity markets recently. It gained 0.1% on the week, while the EUR lost 0.1% and the JPY lost 1.5%.
NEXT WEEK
Economically it appears to be a quiet week. There is nothing scheduled until wednesday when Wholesale inventories and the Budget deficit will be reported. On thursday, the weekly Jobless claims and the Trade deficit. Then on friday, Retail sales, Consumer sentiment and Business inventories. The FED issues a Flow of funds statement on thursday and that is it. Quiet weeks usually lead to technical markets. Best to you and yours!
friday update
SHORT TERM: uptrend resumes, DOW +122
Overnight all the Asian markets were higher. Europe opened higher and closed +1.35%. US index futures were higher overnight. At 8:30 the monthly Payroll report was flat: -36K v -26K, and a 9.7% v 9.7% Unemployment rate. The market reacted favorably to the report and opened at SPX 1125. Immediately, the market rallied through the uptrend high of SPX 1126 and continued to 1135 by 10:30. After reaching this level the market actually went sideways until about 2:00. After this consolidation the market started moving higher again. At 3:00 monthly Consumer credit rose for the first time in a year: +$5 bln v -$4.6 bln,
http://www.federalreserve.gov/releases/g19/Current/. Around 3:00 the SPX hit 1139, pulled back a couple of points, and then closed at 1139.
For the day the SPX/DOW were +1.30%, and the NDX/NAZ +1.50%. Bonds ended their consolidation losing 15 ticks, Crude gained $1.55, Gold was down $1.00, and the USD was lower. Support for the SPX notches up to 1133 and then 1107, with resistance at 1168 and then 1179. Short term momentum was extremely overbought at the close.
Today's rally carried the SPX through the 1126 uptrend high to 1139. This is just a couple of points shy of breaking through the OEW 1133 pivot range. The SPX is quite overbought short term, but the rally from 1086 continues to look okay. At today's high the SPX was only 11 points from retracing the entire Jan-Feb downtrend. Not exactly what one would expect during a bear market. The DOW bullish count continues to display that the market is only in its first wave up from the February downtrend low. This suggests that this market might challenge recent highs before any serious pullback occurs. Will review it all over the weekend. Best to yours!
P.S. We added some additional stocks to the stockchart list yesterday, link below.
MEDIUM TERM: uptrend makes new high at SPX 1139
LONG TERM: bear/bull market inflection point continues to favor bulls
Stock Market Update