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the ELLIOTT WAVE lives onMarket analysis using proprietary Objective Elliott Wave techniques 11月24日 tuesday updateSHORT TERM: market recovers from early selling, DOW -17
Overnight all of the Asian markets were lower. Europe opened lower and closed -0.55%. US index futures traded higher overnight, and at 8:30 the first revision to Q3 GDP came in lower: +2.8% v +3.5%. At 9:00 Case-Shiller reported another monthly recovery in housing prices: -9.4% v -11.3% annualized. The market opened unchanged at SPX 1106, but quickly headed lower hitting 1098 by 10:00. At this time Consumer confidence was reported higher: 49.5 v 48.7, and the FHFA home prices were reported: 0.0% v -0.3%. Also, the FDIC reported an increase in troubled banks: http://www.marketwatch.com/story/fdic-number-of-troubled-banks-rises-to-552-2009-11-24?siteid=bnbh. Independent Case-Shiller reports a year over year decline in home prices at -9.4%, while the government's FHFA reports home prices unchanged for the same period. Nevertheless, the market started to recover around 10:00 and rallied back to SPX 1106 by 11:00. Another pullback followed to SPX 1101 by 11:30, and then the market started drifting higher awaiting the FED's FOMC minutes at 2:00. At 2:00 the FED released their report: http://www.federalreserve.gov/newsevents/press/monetary/20091124a.htm. The SPX then made new highs for the day at 1107, matching yesterday's high. Then pulled back a bit into the close. For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.35%. Bonds were up 18 ticks, Crude dropped $1.40, Gold added $5.00, and the USD was flat. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum stayed around neutral for most of the day. Tomorrow, weekly Jobless claims at 8:30, along with Durable goods and Consumer spending/income. Then at 10:00 Consumer sentiment and New home sales.
Overnight China dropped over 3% which took most of the Asian markets lower. The USD rallied a bit as well. When the GDP number was adjusted downward the SPX futures market headed lower. The selling, however, was short lived as the SPX held around the 1100 level despite taking out yesterday's low. For the rest of the day the market recovered in this holiday trading week. Again the OEW long term pivot at SPX 1107 remains significant resistance, and the short term pivot at 1090 remains support. Any move, one way or the other, will determine the next short term trend. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
11月23日 monday updateSHORT TERM: sunday night USD selling leads to another stock market gap up, DOW +133
Overnight all the Asian markets were higher. Europe opened higher and closed +2.05%. US index futures were higher overnight, and the market gapped up at the open to SPX 1101. It had closed at SPX 1091 on friday. By 10:00 the SPX had rallied to 1112 when Existing home sales were reported higher: 6.10 mln v 5.57 mln. That was the high for the day. After reaching an extremely overbought short term condition, and again failing to break through the OEW 1107 pivot, the market started to pullback. By 2:00 the SPX had reached 1104, still within the range of the 1107 pivot, and tried to rally. At 3:00 the SPX hit 1107, pulled back a few points and then closed at 1106. For the day the SPX/DOW were +1.30%, and the NDX/NAZ were +1.50%. Bonds were up 1 tick, Crude added 20 cents, Gold rallied $18.00 and the USD was lower. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum was extremely overbought at today's highs and remained around the overbought level for most of the day. Tomorrow, the first Q3 GDP revision at 8:30, Case-Shiller home prices at 9:00, then Consumer confidence and FHFA homes prices at 10:00. Later in the day, at 2:00, the FED's FOMC minutes will be released. Another volatile day is likely tomorrow.
Heavy overseas selling in the USD has occurred to start the week for three weeks in a row. Each monday morning the US markets have gapped up in response. Two weeks ago the SPX rallied 24 points on monday, a week ago 16 points, and today 15 points. Today's rally carried the SPX to 1112, just shy of breaking through the OEW 1107 pivot. The DOW made a new high today, but this was not confirmed by the SPX, NDX or NAZ. Should the SPX break through the range of the 1107 pivot we would expect another extension of this uptrend. Since this market continues to be quite choppy, we can not rule out the potential for a diagonal triangle formation to conclude this uptrend. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
11月21日 weekend updateREVIEW
The markets rallied on monday, after another sunday night of USD selling. Then turned flat to lower as the week unfolded. On the economic front, the Philly FED turned higher, along with capacity utilization, retail sales improved but ex-autos they were lower. On the downside were the Empire index, inventories, industrial production, housing starts/permits and leading indicators. Weekly jobless claims edged higher, as did the PPI and CPI. The FED announced they are going to roll back discount window borrowing from 90 days to 30 day as of January 2010. For the week the SPX/DOW were mixed and the NDX/NAZ were -1.2%. Asian markets (+0.3%) were mixed, European markets were all lower (-1.2%) but the Commodity equity markets were higher (+1.6%). Bonds gained 0.5%, Crude added 0.6%, Gold was +2.8% and even the USD index was higher (+0.5%). Home prices/sales, consumer spending, the Q3 GDP revision and FOMC minutes highlight the upcoming holiday week.
LONG TERM: bear market rally
After the bull market ended in Oct 2007 the stock market declined for the next seventeen months, until Mar 2009. The total market loss for the SPX was 58% and the DOW 54%. As of monday/wednesday, when the SPX/DOW were making new recovery highs, the SPX had retraced 49% of that the decline, and the DOW 51%. We projected the potential for this type of bear market rally in early March when the SPX was trading in the low 700's. Below we have posted a chart of the DOW from 1929 to present. We plotted it on a log2 scale so that each box represents either a doubling or a 50% loss depending upon the trend. Notice during this time period there have only been four instances when the DOW has lost about 50% or more of market value: 1929-32, 1937-42, 1973-74 and 2007-09. In OEW terms these types of events are generally considered cycle waves. The exception, of course, is the 1929 cycle wave [5] top and the 2007 cycle wave [5] top. When the fifth cycle wave completes a Supercycle bull market, a supercycle bear market follows. Next observe Cycle waves [1] through [4]. Notice that cycle wave [2] formed a double bottom (flat) and cycle wave [4] only a single bottom (zigzag). This is the rule of alternation: corrective waves of similar degree should alternate in wave structure. Throughout the entire 1932-2007 Supercycle bull market the rule of alternation applied. From the cycles waves labeled on the chart, to the Primary waves, Major waves, Intermediate waves and all waves of a lesser degree, not shown. When we take this rule of alternation one degree higher, from cycle wave to supercycle wave, it should also apply. Therefore it would make sense that the current supercycle bear market should form a double bottom (flat) to alternate with the single bottom (zigzag) of 1929-32.
Next observe after each 50% market value decline there was always, at least, a 50% retracement rally. The 1973-74 cycle wave [4] zigzag bottom naturally never revisted the lows again. The 1937-42 cycle wave [2] retraced 64% of the initial decline before turning over and heading back to the lows. During the 1929-32 supercycle bear market, the stock market lost 50% of its value in 1929, retraced 53% of that decline into 1930, before turning over to make substantial lower lows. Notice all three previous events had different outcomes. Yet, each experienced approximately a 50% total market loss, and then a 50% or more retracement rally. This is the exact reason why we projected a 50% retracement rally from the Mar 2009 SPX 667 low. History does repeat itself, but not in the exact same way.
If we next examine the time factor for each of these cycle type waves. We find that the two zigzags, (single bottoms), took between 23 months (1973-74) and 34 months (1929-32). While the 1937-42 flat, (double bottom), took 61 months. This is quite long compared to the other two cycle type waves. Naturally, since the flat wave structure is a double bottom, it takes longer to unfold than a single bottom zigzag. But something else occurred during cycle wave [2] that did not occur during the other two cycle type waves: the start of World War II. When we examine the 1937-1942 time period we find Germany invaded Poland in 1939. Then in 1940 Germany invaded France, and the Axis of Powers was formed between Germany, Italy and Japan. In 1941 Japan attacked Pearl Harbor which resulted in the USA entering the world war in 1942, the year cycle wave [2] ended. It is likely that the uncertainty of world war II extended this cycle wave. If this assumption is correct, then the current Supercycle wave should last about three years, and not five. In summary, we can conclude that the current Supercycle bear market should take the form of a flat, double bottom. The 58% total market loss was Wave A of this flat and it bottomed in Mar 2009 at SPX 667. The current 49% bear market retracement rally is wave B. Then upon conclusion of wave B, the final leg down to complete the C wave flat should bottom in 2010 with a retest of SPX 667. The year 2010 also coincides with the 4 year cycle low.
MEDIUM TERM: uptrend
We just examined the most probable outcome based on the very long term picture: 1929-2009. Now let's review the current Supercycle bear market from Oct 2007 and SPX 1576. The 58% market loss in the SPX took seventeen months unfold and this was in the form of a detailed zigzag: 5-3-5. You can review this wave structure on the SPX weekly chart using the link below. We labeled the first five waves down Major wave A, the three Major B and the second five waves down Major C. This completed Primary wave A at SPX 667. Since then, Mar 2009, the market has again rallied in three Major waves. Major wave A ended in Jun at SPX 956, Major B in July at SPX 869 and Major C hit SPX 1114 this week, for a 49% retracement of Primary wave A. When Primary wave B concludes, the SPX should decline in a five wave structure to complete a flat (3-3-5), or a complex structure taking the form of a flat (3-3-3). We have decided to begin the labeling of a Primary wave C with a five wave structure, five Major waves, when the next downtrend is confirmed by OEW. Since Primary wave A was clearly a three, and Primary B a three, Primary C should be a five to complete the EW classic 3-3-5 flat.
In early Mar 2009, when Primary wave A appeared to completing. We projected a 50% Primary wave B retracement rally that should end between the two long term OEW pivots: SPX 1107 and SPX 1179. This week the SPX hit 1114. Just above the level of the 1107 pivot, but still within the historical range of pivots in general. During this Primary wave B we have repeatedly noted, that every uptrend during the entire bear market has ended at a long term pivot. Since there are only six long term pivots between SPX 961 and 1530, and there have been six completed uptrends, this is quite an amazing phenomenon. Therefore, we continue to stress the importance of this long term pivot at SPX 1107. Thus far the SPX challenged it during the October rally, which ended at 1101. Then after a sharp pullback to SPX 1029, the SPX has again challenged it during this rally. Should the market break through this pivot, the next one is at SPX 1179.
SHORT TERM
Support for the SPX is at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum rose to neutral after being slightly oversold at friday's low. This Major wave C uptrend has exhibited nine distinct waves. The labeling of these waves is noted on the SPX and DOW daily charts in the link below. Every time the RSI has hit oversold on the daily chart the market has rallied. This did not occur during Major wave A. It did not hit a daily oversold level during the entire uptrend. Clearly the Major wave A uptrend was much stronger than this Major wave C uptrend. When this "buying the dips" pattern changes we can be fairly certain that Primary wave B has ended.
Currently we have counted five waves up from the early November SPX 1029 low: wave 1 SPX 1061, wave 2 SPX 1045, wave 3 SPX 1105, wave 4 SPX 1085 and wave 5 SPX 1114 (1111). This rally looks very similar to all the other rallies during this uptrend: a strong first or third wave, then a weak fifth. We have also observed the usual negative RSI divergence at the SPX 1114 high, and then a small five waves down to 1087. SPX 1100, which is within the range of the 1107 pivot, should offer resistance. The pivot at SPX 1090 is currently support. A break below this support pivot should continue the downside momentum.
One last observation. During this recent extension of the Major wave C uptrend several sectors have remained in downtrends, and NYSE breadth has failed to make a new high. These sectors include; HGX, KBE, KRE, R2K SOX, XLF and XLU. Also, five foreign indices remain in downtrends: ASX, BSE, DAX, EUR50 and the NIKK. The USA uptrend is not only exhibiting internal weakness, but this is spreading worldwide. Best to your trading!
FOREIGN MARKETS
The Asian markets were mixed but were +0.3%. Of the five we follow only the HSI and SSEC made higher highs.
The European market were all lower and were -1.2%. Of these five only the FTSE and IBEX made higher highs.
The Commodity equity markets were all higher gaining 1.6% on the week. Every one of three we follow made higher highs.
COMMODITIES
Bond prices continues to edge higher gaining 0.5% on the week. The 1YR hit new multi-year lows in yield this week, and the 3MTH retested the 0.05% yield low.
Crude gained 0.6% on the week while weakening on thursday/friday. Still in an uptrend, but has not made a higher high since October.
Gold continued to made new all time highs, +2.8% on the week. Uptrends in Gold and Silver continue, as Silver extended on monday.
The USD index gained 0.5% this week. The EUR lost 0.3% verses the USD, while the JPY gained 0.9%. Trends remain the same.
NEXT WEEK
Monday kicks off the week with Existing home sales at 10:00. On tuesday, Q3 GDP revision, Case-Shiller home prices, Consumer confidence and then the government's FHFA home prices. This should make for an easy comparison between public and private statistics. Also on tuesday the FOMC minutes will be released. On wednesday, the weekly Jobless claims (thursday is a holiday), Consumer spending/income, Durable goods, Consumer sentiment and New home sales. Thursday is a national holiday, and on friday trading volume will be quite subdued. Best to your week as the holiday season kicks off.
 11月20日 friday updateSHORT TERM: market dips below yesterday's low then rallies, DOW -14
After the close Bloomberg reported the following: http://www.bloomberg.com/apps/news?pid=20601068&sid=aCzFIW4QXPEE. Overnight the Asian markets were mostly lower. Europe opened higher, but closed -0.50%. US index futures were lower overnight, and the market gapped down again at the open. In the first few minutes the SPX opened at 1090, and then moved higher to 1095 a few minutes later. After that the market started to drift lower. By 11:30 the SPX slipped below yesterday's 1088 low to 1087, but then turned higher. Four hours later, at 3:30, the SPX hit 1094 and then eased back into the close. For the day the SPX/DOW were -0.25%, and the NDX/NAZ were -0.50%. Bonds lost 4 ticks, Crude slipped 35 cents, Gold gained $9.00 and the USD was higher. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum dipped to oversold this morning and then moved back to neutral heading into the close.
Options expiration went out quietly, with an eight point trading range for the day. At this mornings low we could count a small five waves down from the SPX 1114 high, as the market again held the 1090 pivot. In order to resume this downside momentum the SPX will need to decline into the low 1080's. Best to your weekend!
MEDIUM TERM: uptrend high SPX 1114
LONG TERM: bear market rally
11月19日 thursday updateSHORT TERM: USD rally leads to early selloff, DOW -94
After yesterday's close the FED issued the following bulletin: http://www.federalreserve.gov/pubs/bulletin/2009/default.htm. Overnight the Asian markets were mixed. Europe opened lower and closed -1.45%. US index futures were lower overnight, and at 8:30 the weekly Jobless claims were reported flat: 505K v 502K. The market gapped down at the open to SPX 1104 after closing at 1110 wednesday. At 10:00, with the SPX heading toward the 1090 pivot, Leading indicators were reported lower: +0.3% v +1.0%, and the Philly FED was reported higher: 16.7 v 11.5. Around 11:30 the SPX hit 1088, the low for the day. After reaching this level, around the 1090 pivot, the market started to rally from oversold levels. Heading into the close the SPX rallied back to 1096 and closed at 1095. For the day the SPX/DOW were -1.10%, and the NDX/NAZ were -1.60%. Bonds were up 7 ticks, Crude dropped $1.90, Gold added $3.00, and the USD was higher. Support for the SPX drops to 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum was oversold this morning after staying around neutral the past two days. Tomorrow, the monthly Options expiration.
The break lower today, before the SPX reached the 1114 level, was a bit surprising. After checking the DOW hourly chart, we noticed that it had made a higher high on wednesday while the SPX had only reached 1111. This SPX fifth wave failure fits the five waves up from SPX 1085 and SPX 1029, and we labeled the chart accordingly. This rally from the early Nov lows at SPX 1029 ran into resistance at the OEW 1107 pivot, just like the rally from the early Oct lows at SPX 1020. This long term pivot continues to offer significant resistance during the Primary wave B bear market rally. Today's drop to SPX 1088 reached exactly the peak of the early Sept rally from SPX 992. No net progress in the SPX for nearly two months. The following sectors/indices remain in downtrends: HGX, KBE, KRE, XLF, XLU, R2K, and SOX. Also the following foreign indices remain in downtrends: ASX, BSE, DAX, EUR50 and the NIKK. A break below the 1090 pivot would continue the downside momentum, while the 1107 pivot should continue to act as resistance. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
11月18日 wednesday updateSHORT TERM: market continues to consolidate, DOW -11
Overnight the Asian markets were mixed. Europe opened higher but closed mixed. US index futures were higher overnight, but at 8:30 the CPI was reported higher: +0.3% v +0.2% and Housing starts were reported lower: 529K v 592K. Futures pulled back on the news and the market opened slightly lower at SPX 1108. The SPX bounced to 1111 in the opening minutes, at yesterday's high, and then pulled back. Just after 10:00 the SPX hit 1103, near yesterday's low, rallied to 1109 by 11:00, and then retested the low by 1:30. Heading into the close the market rallied close to the high of the day. Essentially, the SPX traded the whole day vacillating above and below the OEW 1107 pivot. For the day the SPX/DOW were -0.10%, and the NDX/NAZ were -0.55%. Bonds were off 10 ticks, Crude gained 50 cents, Gold added $6.00 and the USD was lower. Support for the SPX remains at 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum remained around neutral the entire day. Tomorrow, the weekly Jobless claims at 8:30. Then at 10:00 Leading indicators and the Philly FED. Remember friday is Options expiration.
Today's market activity did little to change the view from yesterday. The market stayed in the consolidation mode, retested yesterday's low, and then moved close to the highs heading into the close. Counts remain the same: Minute waves 1-2-3-4 complete and 5 ongoing from SPX 1029, and Micro waves 1-2-3-4 complete and 5 onging from SPX 1085. We're keeping close attention to inflation. In the last two days both the PPI and CPI were reported higher for October. The consumer deflationary stage of this economic decline appears to have ended. Below is an updated public chart published by http://www.shadowstats.com/. Inflation is not a problem yet. However, once the CPI hits the +2% level we should expect some type of monetary reaction from the FED. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
 11月17日 tuesday updateSHORT TERM: market consolidates after monday's gains, DOW +30
Overnight the Asian markets were mixed. Europe opened lower and closed -0.55%. Yesterday this was reported by Bloomberg regarding interest rates and the bond market: http://www.bloomberg.com/apps/news?pid=20601015&sid=ap3nY9dDbEJE. We covered this potential in the weekend update. Last night FED vice chairman Kohn gave a speech in ILL: http://www.federalreserve.gov/newsevents/speech/kohn20091116a.htm. US index futres were lower overnight as the USD index rallied. At 8:30 the PPI was reported rising +0.3% v -0.6%, and at 9:15 Industrial production was reported lower: +0.1% v +0.6%. The market opened lower at SPX 1105, and then bounced to 1109 by 10:00, where it had closed on monday. Also at 10:00 the FED issued this press release regarding the GLB act: http://www.federalreserve.gov/newsevents/press/bcreg/20091117a.htm. After hitting yesterdays close the market started to pullback, a normal occurence. At 10:30 the FED issued this important press release regarding a reduction in maximum maturity terms of primary credit at the discount window: http://www.federalreserve.gov/newsevents/press/monetary/20091117b.htm. The SPX bottomed for the day at 1102 around 11:30. When the USD started to decline the SPX then started to rally. At 1:00 the Home builders index was reported flat and still depressed despite the Cash for Ninja's mortgage program: 17 v 17. The rally continued until near the close when the SPX hit 1111. For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.25%. Bonds were up 2 ticks, Crude gained 25 cents, Gold added $1.00, and the USD was higher. Support for the SPX remains at 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum stayed around neutral for most of the day. Tomorrow, at 8:30 the CPI and Housing starts.
Today it was announced that this property, built in 1975 at a cost of $75 mln, with probably a replacement cost of $750 mln, was sold at auction: http://www.williamsauction.com/silverdome/. The price $583,000. Yes, 583 thousand dollars. If this is the state of commercial property we're all in big trouble.
Today the pullback to SPX 1102 should have completed the smaller 1-2-3-4 waves from the recent SPX 1085 low. A retest of yesterday's SPX 1114 high could complete five waves up from SPX 1085 and five waves up from the Nov 2nd SPX 1029 low. Barring an extension, a significant breakout above the OEW 1107 long term pivot, the recent 85 point rally should conclude. This rally is very similar to most of the rallies since the March SPX 667 low. A drop below SPX 1100 should be the level to watch on the downside, a rally nearing SPX 1120 on the upside. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
11月16日 monday updateSHORT TERM: another spike up monday as USD slides, DOW +136
Overnight the Asian markets were all higher. Europe opened higher and closed +2.0%. US index futures were higher overnight and the USD declined. At 8:30 Retail sales were reported higher, but excluding autos: +0.2% v +0.4%, and the Empire index declined: 23.5 v 34.6. The market gapped up at the open to SPX 1099, it had closed at 1093 on friday. As the rally continued, at 10:00 Inventories were reported lower: -0.4% v-1.6%. At 10:30 the FED posted the following press release regarding gift cards: http://www.federalreserve.gov/newsevents/press/bcreg/20091116a.htm. Around 12:00 the SPX hit a new uptrend high at SPX 1112. Then at an overbought level the market started to pullback. At 12:30 FED chairman Bernanke NYC speech was released: http://www.federalreserve.gov/newsevents/press/bcreg/20091116a.htm. The market had only pulled back to the OEW pivot at SPX 1107, and started to rally again after this report. At 2:00 the FED issued the following press released regarding mortgages: http://www.federalreserve.gov/newsevents/press/bcreg/20091116b.htm. The market continued to rally, hitting SPX 1114, the upper limit of the OEW 1107 pivot, nearing 3:00. Another pullback followed to SPX 1105 and then the market drifted higher into the close. For the day the SPX/DOW were +1.40%, and the NDX/NAZ were +1.20%. Bonds were up 20 ticks, Crude gained $2.45, Gold rallied $22.00 and the USD made new lows. Support for the SPX now jumps to 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum was overbought at the highs. Tomorrow, the PPI at 8:30, Industrial production at 9:15, then the Home builders index at 1:00.
The market took off today like it did last monday after overnight selling in the USD had propelled that rally as well. The SPX hit a new uptrend high at 1114, right at the limit of the long term 1107 OEW pivot. Should the market clear todays highs, it is likely to challenge the SPX 1122 50% bear market retracement level next. Short term momentum ended the day off the earlier overbought levels. We can almost count a 1-2-3-4 from the SPX 1085 level hit on friday morning. Combining this with the 1-2-3-4 and 5 ongoing, from the SPX 1029 level of Nov 2nd, it would appear this short term rally is close to an end. Negative RSI divergences are starting to appear again. Best to your trading!
MEDIUM TERM: uptrend makes new highs
LONG TERM: bear market rally
11月14日 weekend updateREVIEW
Economic reports for the week were sparse and mostly on the downside: jobless claims dipped but remained over 500K, the trade deficit widened, import prices rose and consumer sentiment dropped. The key factor of the week, however, was the non-event meeting by the G-20 last weekend. When Forex traders did not hear any concern about the decline in the USD, they immediately sold it starting sunday night into monday, and took it to new lows for the downtrend on wednesday. As a result the stock market had a strong rally on monday (+2.2%), extending the uptrend, and made new uptrend highs on wednesday. Then the SPX ended the week exactly where it had closed on monday. For the week the SPX/DOW were +2.4%, and the NDX/NAZ were +3.0%. Asian markets rose 2.2%, Europe gained 2.7%, and the Commodity equity markets rose 3.0%. Bonds gained 0.5%, Crude dipped 0.5%, Gold made new all time highs +2.2%, and the USD dropped 0.7%.
LONG TERM: bear market rally
Lets's review. The bear market started in Oct 07 at SPX 1576. OEW turned bearish in early Jan 08. The stock market then declined for 17 months until Mar 09 and SPX 667. At this point we recognized a completed wave pattern from the bull market high. We then projected, based upon historical references, a 50% bear market retracement rally to SPX 1122. We did not believe the bear market was over, only the first wave. Cyclical bear markets unfold in three Primary waves: ABC. We labeled the SPX 667 low Primary wave A, and expected a counter-trend bear market rally for Primary wave B. When Primary wave B completes, a downward Primary wave C will follow. Historically, bear markets of this degree can last anywhere from 23 months to 60 months. Since Mar 09 we observed three potential areas where the Primary B rally could have failed: Jun SPX 956, Aug SPX 1041 and Oct SPX 1101. Each time the market pulled back, or corrected, and then resumed the counter-trend advance. This week the DOW, which had been lagging, hit the projected 50% retracement level. Throughout this entire Primary wave B, OEW has only been in a confirmed medium term downtrend for about one month. The other seven months it has been in the uptrend mode. We have labeled these trend reversals as Major wave A SPX 956, Major B SPX 869, and Major C SPX 1105 thus far. This Major wave ABC pattern, when completed should end Primary wave B.
We all are well aware that this is not the typical bear market. The bear markets we are accustomed to are inventory demand related, the result of inflationary pressures or currency crises. This bear market was created by a credit contraction of historical proportions. While credit has been contracting in the private sector. The US government (public sector) has committed $23.7 tln in cash infusions, loan guarantees, debt swaps and debt monetization. Considering that the entire US GDP is only about $15 tln, this is a massive monetary intervention. In addition, the US government is running unheard of budget deficits, the FED is debasing the USD through it's monetization program, while Congress is trying to push through huge programs like Health Care Reform and a Climate Change bill. While all this is occurring the unfunded future liabilities of Medicare and Social Security go unaddressed. Naturally, most of you have heard all of this before. Yet, the question remains, what's driving this stock market higher? Simply put, the decline in the USD and record low interest rates.
Everyday we report the results in trading for stocks, bonds, crude oil, gold and the USD. We will attempt to make sense of what's transpiring using these five asset classes plus another factor, inflation. A credit contraction leads to deflation. We see this specifically in real estate, resulting in bank failures, rising unemployment and a contraction in demand from highly elevated levels. In response the government, treasury and the central bank have tried to re-inflate the economy with the previously noted actions. The result of committing funds equal to 1.5 times the GDP has had a stabilizing effect in the near term. Long term, however, there is still a problem for this economy, namely the potential for inflation.
Typically when a currency declines, and/or debt is monetized, imports become more expensive and the end result is inflationary. With the overriding trend in the US deflationary, and China's currency the Yuan pegged to the USD, its largest trading trading partner, the potential for inflation has been stable. This allows the US to maintain record low interest rates in an attempt to allow time for the economy to heal itself. The result of low inflation, low interest rates, a declining USD and an expansive monetary policy, is a rising stock market, and rising prices for Crude and Gold. Excess dollars, created by the FED, are flowing into the stock and bond markets. While Gold and Crude are rising inversely to the decline in the value of the USD. If the FED has the luxury of maintaining this posture for a few years, which is probably its intention, while the deflationary cycle runs its course. Then when credit has stabilized and starts to expand again, the deflationary pressures will ease, and the expansive monetary policy can be begin to unwind. This is the best case scenario.
The problem with this scenario is that it requires a fine balancing act between deflationary pressures and re-inflationary intervention. Many things can go wrong. For example on the currency front. If the USD drops too fast, or breaks to all time new lows, the FED will have to act. The last time they did act was in mid 2008. The FED created a $600 bln currency swap to strengthen the USD. The end result was a crash in the stock market and commodity markets. CPI inflation, at the time, was running over 5%, and PPI inflation had hit 9%. If China decides to allow its currency to float more freely, which was announced this week, inflationary pressures will again start to rise in the US: http://www.reuters.com/article/usDollarRpt/idUSSHA20591820091112. With $437 tln in interest rate derivatives worldwide, anticipating years of low interest rates. The FED will not be able to raise interest rates, and again have to respond by supporting the USD. This would not be good for stocks or commodities. If the economy rebounds too strongly and pent up demand, with plenty of excess dollars, starts to drive up prices due to limited product supply. Inflation will become a factor again. Inflation, as they say, is the canary in the coal mine. For now, with the USD declining expect the Stock market, Crude oil and Gold to be generally rising, and Bonds to be generally steady. When inflation kicks in again, and it will, the FED will need to respond, and its options are limited.
MEDIUM TERM: uptrend makes new highs
The OEW uptrend that started in July at SPX 869 extended again this week as the SPX hit 1105. The short term wave pattern within the uptrend is becoming quite complex, as compared to the previous uptrend from Mar-June. Twice during this uptrend a potential completed pattern appeared, and twice the market pulled back for a few days and then turned higher. The USD, btw, has been in a steady downtrend since April. We continue to count this uptrend as a series of overlapping smaller waves which is corrective in nature. After the initial 149 point surge from the downtrend low at SPX 869 in July. The SPX has displayed a series of smaller rising waves: 60 points, 88 points, 81 points and recently 76 points. Our wave labeling for Major wave C remains the same: Int. wave A SPX 1039, Int. wave B SPX 992 and Int. wave C underway. The fibonacci relationships noted over the past several weeks are still relevant. During Major wave A SPX 667-956, Int. wave C = 0.618 Int. A. During our current uptrend, Major wave C SPX 869-1105, Int. C equalled 0.618 Int. A at SPX 1097. Also the long OEW pivots are still in play. During this entire bear market every uptrend has stopped at a long term OEW pivot. The current OEW pivot at 1107 has provided significant resistance during the October rally and now the November rally. Should this pivot be broken to the upside, the next long term pivot is at SPX 1179. We continue to observe negative divergences on the daily and weekly charts, plus a negative divergence in market breadth. Despite the recent rally in the US to new uptrend highs, only the uptrending sectors made new highs, and the downtrending sectors (HGX, KBE, KRE, R2K, SOX, TRAN, XLF and XLU) remained in downtrends. Also of note, the seven foreign indices we follow also remained in downtrends: ASX, BSE, DAX, EUR50, IBEX, NIKK and TSX. There certainly appears to be less participation during this recent rally.
SHORT TERM
Support for the SPX is at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum was oversold on fridays lows, then turned higher to end the day around neutral. This rally from the Nov 2nd SPX 1029 low appears to be another impulsive five wave structure. These types of short term structures have occurred since Primary wave B began. The problem is that these short term five wave structures have often overlapped into ABC's during both of the uptrends. Or else we'd be in an OEW bull market. We are, however, in a relative bull market as a 50% retracement has occurred in the DOW, and nearly the SPX. The current rally is being counted as: wave 1 SPX 1061, wave 2 SPX 1045, wave 3 SPX 1105, and wave 4 currently 1085. Wave 4 may become a bit more complex as we noticed some weakness on friday afternoon. Wave 5 during these five wave rallies have been quite weak. Expecting the pivot at SPX 1107 to hold. The USD may be forming a diagonal triangle fifth wave. It's action of late has been quite choppy. Also, continue to observe the Canadian dollar. It moves with the SPX. Best to your trading!
FOREIGN MARKETS
The European markets were +2.7% for the week but continue to display a mixed picture. The DAX, EURO50 and IBEX remain in downtrends.
The Asian markets were +2.2%, and again a mixed picture with the ASX, BSE and NIKK in downtrends.
The Commodity equity markets were +3.0%, only the TSX is downtrending, with the BVSP and RTSI still in uptrends.
COMMODITIES
Bonds gained 0.5% on the week despite another huge bond auction. 10YR rates remain in an uptrend unconfirmed by bond prices.
Crude lost 0.5% for the week in a volatile session. Up strongly on monday, then down even more so on thursday. Crude is still in an uptrend.
Gold made new highs +2.2% for the week. Gold has been extending its uptrend while Silver has been going sideways. Worth watching this relationship.
The USD (-0.7%) made new downtrend lows this week. The EUR (+0.4%) and the JPY (+0.3%) gained against the USD. A potential fifth wave diagonal triangle may be forming in the USD, while the EURUSD failed to confirm the USD low.
NEXT WEEK
Busy week ahead. Monday kicks it off with Retail sales and the Empire index at 8:30, then Inventories at 10:00. On tuesday we have the PPI (worth noting), Industrial production and the Home builders index. Wednesday follows with the CPI and Housing starts. Then on thursday we end with the Jobless claims, Leading indicators and Philly FED. The FED has two scheduled speeches both on monday. First FED chairman Bernanke in NYC at 12:15, then FED vice chairman Kohn in ILL. at 6:15. Technicals and economics come into play this week. Best to you and yours!
11月13日 friday updateSHORT TERM: market bounces back from oversold levels, DOW +73
Overnight the Asian markets were mixed. Europe opened higher and closed +0.4%. US index futures were higher overnight following this FED announcement after the close yesterday: http://www.federalreserve.gov/newsevents/press/bcreg/20091112b.htm. At 8:30 the Trade deficit was reported on the rise: -$36.5 bln v -$30.8 bln, and Import prices rose: +0.7% v +0.2%. The market opened higher to SPX 1091 and then retested yesterday's low at 1085 by 10:00. At this time Consumer sentiment was reported on the decline 66.0% v 70.6%. The market responded to the negative news by rallying. At 10:30 the busy FED issued a press release: http://www.federalreserve.gov/newsevents/press/bcreg/20091113a.htm. The market continued to rally hitting SPX 1098 by 12:30. That was the high for the day. After a pullback back to SPX 1088 at 3:00, the market moved higher into the close. For the day the SPX/DOW were +0.65%, and the NDX/NAZ were +0.90%. Bonds were up 2 ticks, Crude slipped 60 cents, Gold rallied $13.00, and the USD was lower. Support for the SPX moves back to 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum moved up from oversold levels finishing the day around neutral. Today's retest of SPX 1085 signalled that wave 4 could have completed at today's oversold levels. The market did rally to SPX 1098 but pulled back to 1088 during the afternoon. Expecting another run at the OEW 1107 pivot next week. Best to your weekend!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
Love oneself, or love oneself and all others. It's a choice. Your future depends on it. Time is short. Make the choice! 11月12日 thursday updateSHORT TERM: market pullsback from overbought condition, DOW -94
Overnight the Asian markets were all lower. Europe opened higher but closed mixed. US index futures were flat to lower overnight, and at 8:30 the weekly Jobless claims was 502K v 512K. The market opened relatively flat at SPX 1098, dipped to 1094 and then moved to 1102 by 10:00. That was the high for the day. Then the market started to pullback hitting SPX 1091 by 11:30. At that time the FED issued the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20091112a.htm. Over the next hour and a half the SPX could only rally three points to 1094. Around 1:00 the SPX started to headed lower. At 3:30 the SPX hit 1085, its lowest level since monday, but still within the OEW 1090 pivot range. For the day the SPX/DOW were -0.95%, and the NDX/NAZ were -0.70%. Bonds were down 4 ticks, Crude lost $2.50, Gold dropped $11.00, and the USD was higher. Support for the SPX slips to 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum went from a negative divergence yesterday to slightly oversold today. Tomorrow, the Trade deficit and Import prices at 8:30. Then Consumer sentiment at 10:00.
After the SPX failed to make a higher high today, which it had done for six days in a row, the market pulled back. Yesterday the USD rallied, but the market closed higher. Today the USD rally continued and the market gave way. On the short term charts its looks like the SPX completed the third wave up from the 1029 low. If we are still in the rally impulse mode, would expect wave 4 to complete shortly and then another push into the OEW 1107 pivot. This long term pivot is still offering solid resistance, as it should. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
all that glittersIn the 1980's, after formulating OEW, I did an analysis of Gold for the CEO of Placer Dome, and the Gold analyst at Brown Brothers Harriman. Not being a gold bug, per se, forgot all about this until seeing the historical charts recently. The analysis was based on the Comex spot price. Gold did rally to over $500 in 1988, but central bank selling ended that X wave.
Today I pulled up some historical charts (1969-1980) and labeled them, attached. Noticed some interesting time/price/count relationships to our current market. 1969-1976: start of bull market to end of Primary wave IV. 2001-2008: start of bull market to end of Primary wave IV. Both seven years. Start of bull market to end of Primary III: $35 to $195: +450% Start of bull market to end of Primary III: $255 to $1034: +300% The PPT was not created until 1988. 1978: breakout from Primary wave III top occurred during Int. iii of Major wave 3. 2009: breakout from Primary wave III top occurred during Int. iii of Major wave 3. 1978: Major wave 3 topped 25% above Primary III, then Major 4 retested breakout. 2010: Major wave 3 tops 25% ($1300) above Primary III, then Major 4 retests breakout? 1978-1980: Major wave 5 goes parabolic. 2010-2012: Major wave 5 goes parabolic? In 1980 Gold hit $875 from a low of $35 in 1969. Price was fixed for a long period of time prior to the bull market. In 2012 Gold may hit $6700 - $7150 in 2012. Price has been manipulated but not fixed. Price projections are based on the actual inflation rate from 1980, using the 1980 CPI formula. These two levels were calculated by Bob Chapman (International Forecaster) and John Williams (Shadow Stats). History resonating into the future.
11月11日 wednesday updateSHORT TERM: Happy Veterans day worldwide, DOW +44
After the close yesterday the FED made the following press release: http://www.federalreserve.gov/newsevents/press/other/20091110a.htm. Overnight most of the Asian markets were higher. Europe opened higher and closed +0.85%. US index futures were higher overnight as the USD index made new lows for its downtrend. At the open the SPX hit 1098 and continued to rally to new uptrend highs at SPX 1105 by 10:30. That was the high for the day. A pullback to SPX 1094 followed until noon. An attempt to rally further fell short at SPX 1099 by 12:30. Then the market pulled back to the lows for the day at 2:00, before heading back to 1099 where it closed. For the day the SPX/DOW were +0.45%, and the NDX/NAZ were +0.65%. Bonds were up 8 ticks, Crude added 20 cents, Gold rallied $16.00, and the USD was also higher. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum is displaying a negative RSI divergence at todays high. Tomorrow, the weekly Jobless claims at 8:30.
The new high in the SPX today, joining the DOW, forced us to update the hourly and daily chart. This uptrend never did reverse and now the SPX is making new highs. Quite unusual, considering that seven of the thirteen foreign indices we follow were in confirmed downtrends. With US interest rates at nearly zero, the 1YR made a new low yesterday at 0.33%, the USD index making new downtrend lows, and the no comment USD policy at the G20. Monday gave new life to the US uptrend. We're now maintaining two short term counts, one for the SPX and the other for the DOW, for this uptrend. It continues to get more and more complex. Looking ahead, the OEW 1107 long term pivot should continue to offer strong resistance. It halted the previous rally, and may halt this one as well. Over the past couple of days the OEW 1090 pivot has provided support for the market. A break below this pivot should generate some downside momentum. The DOW, btw, hit a 50% bear market retracement today. The SPX 50% retracement is at 1122. Best to your trading!
MEDIUM TERM: uptrend extends to new highs SPX 1105
LONG TERM: bear market rally
11月10日 tuesday updateSHORT TERM: market consolidates after yesterday's rally, DOW +20
Overnight most of the Asian markets were higher. Europe opened higher but closed -0.1%. US index futures were lower overnight following FED governor Tarullo's speech: http://www.federalreserve.gov/newsevents/speech/tarullo20091109a.htm. At the open the market traded to SPX 1090, it had closed at 1093 on monday. The market then rallied to 1096 by 10:30 the high for the day. After that the market started to pullback from extremely overbought levels. By 11:30 the SPX hit 1089, right at the 1090 pivot. A bounce to SPX 1093 followed, and then another pullback this time to 1087 by 12:30. Then the market moved higher yet again. Right after FED governor Tarullo's afternoon speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20091110a.htm, the SPX hit 1095 and then eased back into the close. For the day the SPX/DOW were mixed, and the NDX/NAZ were mixed. Bonds were up 2 ticks, Crude slipped 30 cents, Gold added $4.00, and the USD was flat. Support for the SPX remains at 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum was extremely overbought this morning and pulled back some during the day. Tomorrow is a federal holiday, but most of the markets will be open.
After yesterday's big rally and during today's consolidation day we took a look at the SPX/DOW uptrend counts. The DOW, as you know, has made new highs. At this stage of this uptrend we offer an alternative count on the DOW charts. What has been most perplexing is that every rally during this uptrend has overlapped the previous rally high. This is certainly corrective, and not bullish, activity. Yet these indices just seem to keep moving higher. Aiding the equity market, of course, is the ongoing weakness in the USD. With the SPX testing and holding the 1090 pivot today, would expect it may challenge the OEW 1107 pivot next. However, we are maintaining the SPX as is for now. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally
11月9日 monday updateSHORT TERM: USD index makes new lows and stocks rally, DOW +204
Overnight all the Asian markets were higher. Europe opened higher and closed +2.25%. US index futures were higher overnight and at the open the SPX gapped up to 1075. It had closed at SPX 1069 on friday. Right from the opening bell the market continued to rally, with no more than a two point pullback, throughout the day. At 2:00 the FED issued the following loan survey: http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200911/. By 2:30 the SPX rose above 1090 and continued to move higher. At 3:00 the FED made the following announcement: http://www.federalreserve.gov/newsevents/press/bcreg/20091109a.htm. For the day the SPX/DOW were +2.15%, and the NDX/NAZ were +2.05%. Bonds were up 6 ticks, Crude rallied $1.85, Gold rose $7.00, and the USD was lower. Support for the SPX jumps to 1090 and then 1061, with resistance at 1107 and then 1133. Short term momentum ended extremely overbought. Tonight a speech from FED governor Tarullo at 7:00 from NYU.
Over the weekend the G-20 met for another non-event. When FX traders noticed nothing of substance was stated about the declining USD, they sold it. This helped the equity markets in Asia, Europe and then in the USA rally. Crude, Gold, Commodities and other Currencies also rallied. During today's rally the DOW clearly made new highs, while the SPX/NDX/NAZ did not. Since the SPX never came close to breaking through the 1061 pivot, and rallied right up to the 1090 pivot, it certainly looks like the uptrend could be extending. This has been one tough uptrend to track. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market
OEW tutoringLong term investor psychology cycles influence markets. 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 can historically analyze any market to define its exact wave structure, and determine what the past is projecting about the future. We did this in the early 1980's on the entire history of the US stock market. When waves are determined quantitatively they never change, past or present. Our analysis led us to believe that a stock market crash was likely in late 1987 or early 1988. When the stock market did crash in October 1987, and then the wave structure resumed its bull market to new highs in 1990. We knew we had uncovered some of the missing tenets of the Elliott Wave Theory. Recently OEW analysis has led to some important projections in a variety of markets. We projected the 2005 bull market in China. That market rose about 400% in two years. We determined a Housing top in mid-2005. That bear market was confirmed in the spring of 2006. We determined the top in the Banking sector in mid-2007. That bear market was confirmed in late 2007. We remained bullish on equity markets worldwide until early January 2008. And, despite this recent upsurge, which we anticipated, we remain bearish. OEW projected the bull market in the USD in the spring of 2008, and recently turned bearish near the highs. OEW projected the top in the Crude market at exactly $148/bbl last summer. OEW has remained long term bullish on Gold since 2001, and remains bullish. Finally, OEW is projecting a major bear market in Bonds, and a new bull market in Natural Gas. Bull and bear markets can last for years. Uptrends and downtrends last for months, and can often be 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 follow the bull/bear market as it unfolds. If you are interested in learning how to do this type of analysis yourself, and joining our international OEW group, please contact me at caldaro@msn.com for details. Best to your trading! 11月7日 weekend updateREVIEW
The world's markets rebounded this week after the previous weeks selling pressure. Australia raised rates another 0.25%, but the US and Europe remained unchanged. Most of the economic reports displayed improvement: ISM, construction spending, factory orders, auto sales, ADP, the weekly jobless claims, productivity and even non-farm payrolls. Yet on friday, the unemployment rate was reported at 10.2%, plus wholesale inventories and consumer credit continue to decline. For the week the SPX/DOW were +3.2%, and the NDX/NAZ were +3.6%. The Asian markets were mixed but rose 0.9%, Europe rose 1.3%, and the Commodity equity markets rose 2.3%. Bonds lost 0.2%, Crude was +0.6%, Gold +4.7%, and the USD (-0.8%) lost ground to the EUR (+0.9%) and JPY (+0.3%). Next week the economic reports are sparse and the markets should trade on technicals alone.
LONG TERM: bear market
As we enter the month of November we also enter the 25th month of the bear market in OEW terms. In some circles this 65% rally, over the previous seven months, is considered a bull market. Considering that the SPX took five years, in the previous bull market, to gain 105%. One could say, in percentage terms, they are correct. Percentage terms, however, do not define long term trends. These trends are defined by the wave patterns. And the patterns continue to suggest that this big rally was a rally within an overall bear market. In early January 2008 OEW confirmed a bear market. We tracked the waves down from Oct 07 SPX 1576 to Mar 09 SPX 667. At that low OEW identified a potential completed pattern, a detailed zigzag, that we labeled Primary wave A. Then based upon historical wave relationships, detailed in the previous weekend update, we projected a five month rally to SPX 1122. Recently, after seven months, the SPX hit 1101. This is within the range of the 50% bear market retracement (SPX 1122) we had anticipated. Recently OEW identified another potential completed pattern, a Primary wave B zigzag. In order to confirm this pattern the SPX/DOW will have to enter a confirmed downtrend. This has yet to occur. We are, however, observing confirmed downtrends in seven of the thirteen foreign markets we follow: the ASX, BSE, DAX, Euro50, IBEX, NIKK and TSX. Often, especially in Asia and Europe, these indices lead the US. Therefore, we continue to believe a potential Primary wave B high has occurred, and Primary wave C should be underway. When confirmed, the two potential scenarios we anticipate are either a retest of the 2009 lows, or a break of those lows into the SPX 400's area. Since Primary wave A took seventeen months to unfold, Primary wave C will also take many months to unfold as well. As it unfolds we'll get a better idea of what to expect longer term.
MEDIUM TERM: uptrend in jeopardy
During the Primary wave B rally we observed a basic ABC pattern. We labeled this structure as three Major waves: A SPX 956, B SPX 869 and C SPX 1101. Each of these three Major waves also subdivided into zigzag patterns of their own. Major wave B was a simple abc, but the two others were more complex. Major wave A took the form of a double zigzig, and we separated each zigzag with Intermediate waves: A SPX 876, B SPX 827 and C SPX 956. Major wave C also took the same form and we have again separated each zigzag with Intermediate waves: A SPX 1039, B SPX 992 and C SPX 1101. Supporting this potential Primary wave B top scenario are fibonacci relationships, momentum and the OEW pivots.
Within the larger Primary wave B structure we observe that during both Major wave A and wave C: Int. wave C equalled 0.618 Int. wave A, a common fibonacci relationship. In momentum, at the completion of each Intermediate wave there was a negative RSI divergence on the daily charts. And, at the completion of each Major wave there was a negative RSI divergence on the weekly charts. In regard to the OEW pivots, every uptrend during the entire bear market has ended at a long term pivot. The current long term pivot is SPX 1107, and SPX 1101 is within range. Finally, the recent decline from SPX 1101 to SPX 1029 appears to be five waves on the hourly charts. This is the first detailed five wave structure to the downside since Primary wave B began in March 09. And, the rally from SPX 1029 to fridays SPX 1071 high looks choppy and corrective. This is exactly what should be observed during a counter-trend rally in a downtrend.
SHORT TERM
Support for the SPX is at 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum is displaying a negative RSI divergence at friday's high. With the decline from SPX 1101 to SPX 1029 appearing as an implusive five waves, and the rally to SPX 1071 appearing to be a corrective three waves, with a 61.8% relationship. We should now expect the market to turn over at any time. Once the OEW 1061 pivot is broken to the downside the next wave down should be underway. If, by chance, the market continues to rally and hits the 1090 pivot, an extension to the uptrend is probably underway. Bear market patterns are not as easy to decipher as bull market patterns. Corrective waves can subdivide, just like impulse waves. With these parameters set, best to your trading!
FOREIGN MARKETS
Asian markets were mixed but gained 0.9% overall. The ASX (-0.9%) and NIKK (-2.5%) were lower on the week. These two, plus the BSE (+1.7%) are in confirmed downtrends.
European markets were all higher gaining 1.3% on the week. The DAX (+1.4%), Euro 50 (+1.9%) and IBEX (+1.2%) are also in confirmed downtrends.
Commodity equity markets were mixed but gained 2.3% overall. The TSX (+3.1%) is the only one in a confirmed downtrend in this group.
COMMODITIES
Bonds slipped 0.2% on the week. Rates remain in an uptrend but unconfirmed by bond prices as of yet. Another big Treasury auction in the week ahead.
Crude gained 0.6% on the week even with a sharp decline on friday. Still expecting a bit more selling before the uptrend resumes.
Gold has had its biggest rally in a month +4.7% and hit $1100. The uptrend extended, but Silver will need to make new highs to extend its uptrend. Our original target for this Gold uptrend was $1119. It's now getting close.
The USD (-0.8%) pulled back after getting overbought. The EUR (+0.9%) and the JPY (+0.3%) gained against the USD. Expecting the DXY to head higher shortly.
NEXT WEEK
A quiet week ahead, economically. Nothing on the economic agenda until thursday, when the weekly Jobless claims will be reported. Then on friday, the Trade deficit, Import prices and Consumer sentiment. The FED is also relatively quiet this week. FED governor Tarullo gives two speeches. The first on monday night at NYU. The second at the IBBC on tuesday in late afternoon. Wednesday is a federal holiday, Veterans day, but most markets will be open. We salute fellow veterans worldwide.
Best to your week!
Love oneself, or love oneself and all others. It's a choice. Your future depends on it. Time is short. Make the choice! 11月6日 friday updateSHORT TERM: volatile day after unemployment rate hits 10.2%, DOW +17
Overnight the Asian markets were all higher. Europe opened higher and closed +0.25%. US index futures were higher overnight, but at 8:30 sold off when the Non-farm payrolls report came in at -190K v -219K. At the open the SPX gapped down to 1059, that was the low for the day. Soon after the open the market started to rally. At 10:00 the SPX hit 1071, the highest it has been since the SPX 1029 low on monday. Also, at that time Wholesale inventories were reported still declining: -0.9% v -1.3%. The market pulled back on the news hitting the OEW pivot at SPX 1061 by 10:30. Holding the pivot again the market started to rally. By 1:30 the SPX hit 1070 and then pulled back to 1065 by 3:00. At this time Consumer credit was reported lower -$14.8 bln v -$9.9 bln: http://www.federalreserve.gov/releases/g19/Current/default.htm. After that the market edged higher into the close. For the day the SPX/DOW were +0.20%, and the NDX/NAZ were +0.45%. Bonds were up 12 ticks, Crude dropped $1.95, Gold rallied $7.00, and the EUR was lower. Support for the SPX remains at 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum hit overbought this morning, setting up a negative divergence, dropped to neutral, and then moved higher into the close.
Today the market looked like it was going to break twice, but held the OEW 1061 pivot both times. As noted yesterday, this pivot needs to broken to the downside in order to reassert downside momentum again. The rally from SPX 1029 appears to be a counter choppy ABC. Recently, GS and the XLF have joined KBE and KRE in downtrends. This is the first confirmed downtrend for GS since March. With seven of our 13 foreign indices in confirmed downtrends, we feel it's only a matter of time before the US is in a confirmed downtrend as well. Best to your weekend!
MEDIUM TERM: uptrend remains in jeopardy
LONG TERM: bear market
11月5日 thursday updateSHORT TERM: weekly jobless claims drop to only 512K, DOW +204
Overnight the Asian markets were mixed. Europe opened lower but closed +0.55%. US index futures were higher overnight. At 8:30 weekly Jobless claims were reported at 512K v 532K, Productivity jumped 9.5% v 6.9%, and Unit labor costs declined -5.2% v -6.1%. At the open the market gapped up to SPX 1052, which is similar to what occurred at yesterday's open. Around 11:00 the SPX rallied back to the OEW pivot at 1061, retracing yesterday's late selling after the FOMC statement. After a small pullback to SPX 1059 by noon, the market rallied to SPX 1066 by 2:00. Again the market had a small pullback to SPX 1061, holding the OEW pivot, and then rallied up to 1067 at the close. If you recall, the high on Oct. 29th was SPX 1067, which was the 4th wave of Minute wave 3. For the day the SPX/DOW were +2.00%, and the NDX/NAZ were +2.40%. Bonds were up 9 ticks, Crude slipped 65 cents, Gold added $4.00, and the EUR was flat. Support for the SPX jumps 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum is starting to display a negative divergence on this new series of highs during this rally from SPX 1029. Tomorrow, the much watched Non-farm payrolls report and Unemployment rate at 8:30. Then at 10:00 Wholesale inventories, and at 3:00 the Credit report.
Yesterday's late day selloff quickly reversed today. This type of volatility often occurs after FOMC statements. Then either late in the day, or the following day, the market resumes its previous path. Today the SPX rallied right back to 1067, which was the high on Oct 29th. This level is still within the OEW 1061 pivot range. Tomorrow's non-farm payroll report should create a significant move, no matter what the data shows. Short term negative divergences are appearing on many timeframes. It will take, however, a break below the OEW 1061 pivot to get momentum heading to the downside again. Best to your trading!
MEDIUM TERM: uptrend remains in jeopardy
LONG TERM: bear market
11月4日 wednesday updateSHORT TERM: another volatile day that ends relatively flat, DOW +30
Overnight the Asian markets were all higher. Europe opened higher and closed +1.55%. US index futures were higher overnight, and at 8:15 ADP reported their job loss numbers at -203K v -227K. The market continued to move higher and gapped up at the open to SPX 1051. At 10:00 ISM services reported in at 50.6% v 50.9%. The market continued to rally until about 11:00, when the SPX hit the OEW pivot at 1061, and short term momentum was overbought. A pullback followed as market pundits awaited the FOMC announcement. At 1:45 MSFT announced it was laying off 800 people. Then the fireworks for the day began, when at 2:15 the FED FOMC statement was released: http://www.federalreserve.gov/newsevents/press/monetary/20091104a.htm. After the statement the SPX quickly dropped to 1049 by 2:30, and just as quickly reversed. In the next 10 minutes the SPX rallied to the highs for the day, right at the OEW 1061 pivot, and then turned over yet again. Heading into the close the SPX hit a new low for the day at 1045, and it closed at SPX 1047. For the day the SPX/DOW were +0.20%, and the NDX/NAZ were mixed. Bonds lost 8 ticks, Crude gained 60 cents, Gold added $8.00, and the Euro was higher. Support for the SPX remains at 1041 and then 1018, with resistance at 1061 and then 1090. Short term momentum was overbought this morning, and dropped past neutral at the close. Tomorrow, the weekly Jobless claims at 8:30, along with Productivity and Unit labor costs.
Today's rally carried the SPX right into the OEW 1061 pivot. This rally has been choppy from monday's SPX 1029 low, which is exactly what was expected. The 32 point rally is fairly close to a 50% retracement of the 72 point decline from SPX 1101 to 1029. The market did get overbought on the hourly and short term charts, which is what should be expected during a Minor wave 2. Also, we might consider this an ABC rally as well. The short term charts indicate that the market has turned over and Minor wave 2 may be complete. FOMC days are often retraced the following day. So tomorrow's action should confirm if Minor wave 2 is still ongoing, or Minor wave 3 is underway. Best to your trading!
MEDIUM TERM: uptrend remains in jeopardy
LONG TERM: bear market
11月3日 tuesday updateSHORT TERM: market opens lower on higher USD but recovers, DOW -18
Overnight the Asian markets were mostly lower. Europe opened lower and closed -1.35%. US index futures were at first higher overnight, but headed lower after the Australian central bank raised rates another 25 basis points. At the open the market gapped down to SPX 1034. The SPX closed at 1043 yesterday. By 10:00 the market had rallied back to unchanged at SPX 1043. At this time Factory orders were reported +0.9% v -0.8%, and the FED issued the following press release: http://www.federalreserve.gov/newsevents/press/other/20091103a.htm. The market weakened on the news and pulled back to SPX 1035 by 11:30. Again the market held the OEW 1041 pivot and started to rally. By 2:30 the SPX had rallied into positive territory at SPX 1046. A pullback to SPX 1040 at 3:00 folowed, then monthly Auto sales were released: GM +4.7%, F +2.6% and C -30.0%. The market then edged up a few points to close out the day at SPX 1045. For the day the SPX/DOW were mixed, and the NDX/NAZ were +0.30%. Bonds were off 12 ticks, Crude rallied $1.30, Gold spiked $31.00, and the Euro was lower. Support for the SPX remains at 1041 and then 1018, with resistance at 1061 and then 1090. Short term momentum remained around neutral for most of the day. Tomorrow, the ADP employment index at 8:30, ISM services at 10:00, the the FOMC statement at 2:15.
Today's gap down opening to SPX 1034 stayed within the range of the OEW 1041 pivot. After that the market became choppy, with an upward bias, for the rest of the day as the SPX vacillated above and below the pivot. This type of action is what is to be expected if we are indeed in a Minor wave 2. Minor wave 1 impulsed down, Minor wave 2 up should now be a choppy abc. Two other European indices confirmed downtrends today. Now three of the five indices we follow in Asia and in Europe are in confirmed downtrends. In the US the banking sectors KBE and KRE, housing HGX, utilities XLU, semiconductors SOX, Russell 2000, and despite the spike up today, the TRANsports are all in confirmed downtrends. The potential downtrend in the US is gaining internal momentum, still unconfirmed however. Best to your trading!
MEDIUM TERM: uptrend remains in jeopardy
LONG TERM: bear market
11月2日 monday updateSHORT TERM: volatile day after ISM report, DOW +77
Over the weekend the largest US small business lender CIT declared bankruptcy. It's the fifth largest bankruptcy in US history. Overnight the Asian markets were mostly lower. Europe opened lower but closed +0.75%. US index futures were higher overnight, and at the open the SPX traded between 1038 and 1043 before settling back to 1037 just before 10:00. The SPX closed at 1036 on friday. From SPX 1037 the market rallied 15 points in about 15 minutes as the ISM manufacturing report was higher than expected: 55.7% v 52.6%, and Construction spending was +0.8% v -0.1% (+0.8% before revision). Just after 10:00 the SPX hit 1052 its high for the day. By 10:30 the market started to retrace some of its gains. At 11:30 FED director Greenlee's testimony to the Senate was released: http://www.federalreserve.gov/newsevents/testimony/greenlee20091102a.htm. At 12:00 selling started to accelerate to the downside and by 1:00 the SPX had hit a new low for the decline at 1031. Friday's low was SPX 1034. A rally attempt followed to SPX 1037 by 1:30 but the market made a new low at 1029 by 2:00. The low for the day. The market has now declined 72 points from the SPX 1101 high. This is its largest drop since the July uptrend began, and the second largest drop since Primary wave B began in March. By 3:00 the SPX had rallied back to 1040, right at the 1041 OEW pivot, when FED governor Tarullo's speech was released: http://www.federalreserve.gov/newsevents/speech/tarullo20091102a.htm. Then the market bounced around into the close. For the day the SPX/DOW were +0.70%, and the NDX/NAZ were +0.30%. Bonds were down 5 ticks, Crude rallied $1.15, Gold surged $19.00, and the Euro was higher. Support for the SPX moves back to 1041 and then 1018, with resistance at 1061 and then 1090. Short term momentum bounced around between oversold and neutral today. Tomorrow, Factory orders at 10:00, and then monthly Auto sales in the afternoon. Also tomorrow the FED starts its two day FOMC meeting.
Quite a volatile day. The market opened about unchanged, spiked up over 1% in 15 minutes, turned down over 2% to make new lows, and then closed up on the day. In the process of this volatility it appears that the rally to SPX 1052 completed our wave 4, and today's low could have completed wave 5 as well. Since we are expecting the entire downtrend, when confirmed, to be an Intermediate wave. We are labeling this first five wave decline as Minor wave 1, with possibly an abc Minor wave 2 currently underway. The degree of the waves posted on the hourly chart have been changed to reflect the count. A couple of more foreign markets confirmed downtrends, which brings our count to five out of thirteen. Foreign markets can either lead or lag US downtrend confirmations. These appear to be leading: ASX, BSE, IBEX, NIKK and TSX. This decline definitely looks impulsive. Would expect downtrends to be confirmed in the US soon. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market
10月31日 weekend updateREVIEW
Despite a surge in Q3 GDP (+3.5%) and generally otherwise neutral economic reports the US stock markets plunged: SPX/DOW -3.3% and the NDX/NAZ -5.0%. This week's drop was the largest since the week of May 11th in the SPX/DOW, and the week of Mar 2nd in the NDX/NAZ. There were improving economic reports in housing prices, durable goods orders, the Chicago PMI and consumer sentiment. The weekly jobless claims were neutral, and declining reports in consumer confidence, new homes sales, personal income and consumer spending. In other markets Asia was -3.9%, Europe -3.7% and the Commodity equity markets were -5.7%. Bonds gained 0.9%, Crude lost 4.4%, Gold slipped 0.9%, and the USD (+1.2%) rallied against most currencies except the JPY (+2.2%). In the week ahead ISM, Auto sales, the Payrolls report and the FOMC suggests another volatile week.
LONG TERM: bear market
A five year bull market unfolded between Oct 02 and Oct 07. During that period of time the SPX rose from 769 to 1576 or 105%. Then the SPX entered a bear market, where it has remained, (in OEW terms), since that time. Please recall I have noted that the months of Mar and Oct have been creating significant turning points for several decades. From the SPX 1576 Oct 07 high the market dropped to SPX 667 in Mar 09. A total market loss of 58%, wiping out the entire five year gain in just 17 months. This 50% plus loss confirmed that this wasn't just a common bear market, but one of Cycle or even Supercycle proportions. Historically there were only three other occassions in the past century when the market lost about this much value: 1929-1932, 1937-1942 and 1973-1974. These are the three Cycle waves of the past century. Cycle waves typically unfold in three large waves. We label them Primary waves A, B and C. Primary wave A usually creates a 50% loss in total market value. Primary wave B usually retraces 50% of the entire decline, and many claim a new bull market is underway. Then Primary wave C resumes the bear market and bottoms near the Primary wave A low or much lower. These types of bear market can last anywhere from 23 months to 60 months.
During the Oct 07 to Mar 09 decline Primary wave A formed a detailed zigzag (5-3-5). We labeled the zigzag as three Major waves: A SPX 1257, B SPX 1440 and C SPX 667. The details can be found on the SPX weekly chart. Within a few days of that low, we suggested a completed wave structure for Primary wave A, and projected the potential for a 50% retracement Primary wave B (SPX 1122), which is between our two long term OEW pivots: SPX 1107 and SPX 1179. Last week Primary wave B hit the SPX 1107 pivot for the first time after a seven month rally. On Oct 19th the SPX hit 1100, and on Oct 21st it hit SPX 1101. This week the market turned sharply lower. The wave structure during the Primary wave B advance took the form of a complex zigzag. Zigzags are quite common in bear markets. We again labeled this zigzag with three Major waves: A SPX 956, B SPX 869 and C SPX 1101. At the current high the SPX had retraced 48% of the entire Primary wave A decline. History, when interpreted correctly and truthfully certainly repeats. Once OEW confirms a downtrend, which should be soon, the most logical objective would be for the SPX to retest Major wave B at SPX 869. This would only complete the first wave down of Primary wave C. It's still a bear market.
MEDIUM TERM: uptrend in jeopardy
As noted above Primary wave B unfolded in three Major waves to complete a complex zigzag. What made it complex was that both uptrends, Major waves A and C, unfolded internally as double zigzags. Bear market rallies are certainly not bull market impulse waves. Bear markets teach the finer points, with a myriad of complex patterns, of the Elliott Wave. Bull markets then allow the EW technician to put that knowledge to maximum use. The details of this complex Primary wave B zigzag can be found on the SPX daily chart. Both Major waves A and C were seven wave structures. The first three waves, a 5-3-5 zigzag, we labeled as Intermediate wave A. Intermediate wave B then became the fourth wave, and the next three waves, another zigzag, completed Intermediate wave C and each Major wave. Notice the symmetry between Major waves A and C. Also notice the negative divergences at every Intermediate wave high on the daily chart, and the negative divergence at both Major waves on the weekly chart. When one calculates the fibonacci relationships between the waves, as we noted last weekend, the following relationship stood out. During Major wave A, Int. C = 0.618 Int. A at SPX 956 and during Major wave C, Int. C = 0.618 Int. A at SPX 1097. It certainly appears Primary wave B should have concluded at SPX 1101.
SHORT TERM
Support for the SPX is at 1018 and then 990, with resistance at 1041 and then 1061. Short term momentum was oversold at the close on friday and displaying a slight positive divergence. Each of the rallies during both Major wave A and C were five wave structures. The early ones in Major A were diagonal triangles, and then after that simple impulse waves. At the early October SPX 1020 low we anticipated one more five wave rally to complete the entire Primary wave B structure. It unfolded exactly as labeled on the SPX 60 minute chart. When negative divergences accompanied that fifth wave on all timeframes, from the very short term up to the weekly charts, and it ended at a long term OEW pivot. We alerted that an uptrend top may be at hand to conclude Primary wave B. Every uptrend, during this entire bear market, has ended at an OEW pivot. Now that the decline appears to be underway and is impulsing downward, we are starting to get downtrend confirmation from other indices, sectors and indicators. Currently Spain's IBEX, Canada's TSX and Japan's NIKK are in downtrends. This is the first downtrend for Spain since the Mar 09 low. As for the sectors: Housing HGX, Banking KBE, Utilties XLU and the Semiconductor index SOX are in downtrends. This is the first downtrend in the XLU since Mar 09. Along with various stocks that are in downtrends, see pages 15-20 in the link below, we have observed the following indicator signals. The put/call ratio hit its highest daily level since Nov 08, the advance/decline ratio topped with a negative divergence, and the UP/DN volume hit its highest weekly level since 2000. The popular VIX is now in an uptrend, and as Matt in our OEW group pointed out, today was the largest one day surge in over five years. The current 30 reading implies a 2% daily volatility range. The short term count remains unchanged: wave 1 SPX 1074, wave 2 SPX 1096 and wave 3 possibly ending at SPX 1034. The internals of wave 3 is a nice five wave structure: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042, wave 4 SPX 1067 and wave 5 possibly SPX 1034. Once the downtrend is confirmed by OEW we will apply the proper wave labeling with wave degree etc. on the charts. Best to your trading!
FOREIGN MARKETS
The Asian markets lost 3.9% on the week, all indices were down, and the biggest loser was India's BSE (-5.4%). NIKK in confirmed downtrend.
The European markets lost 3.7% on the week, all down also with the biggest loser Germany's DAX (-5.7%). IBEX in confirmed downtrend.
The Commodity equity markets lost 5.7% on the week, again all down with Russia's RTSI (-7.7%) the biggest loser. TSX in confirmed downtrend.
COMMODITIES
Bonds gained 0.9% this week. Bond yields remain in an uptrend, but not confirmed by bond prices yet.
Crude lost 4.4% on the week, but remains in an uptrend. Crude was quite overbought recently so it could pullback some more.
Gold lost 0.9% in a volatile week. Should be in correction mode along with Silver (-7.7%), but should hold the recent low at $1027 spot.
The USD gained 1.2% for its best week since June 1st. That's the last time the EURUSD (-2.0%) went into a correction. The JPYUSD was +2.2%.
NEXT WEEK
A very busy week ahead, which will probably add to the volatility. On monday, ISM manufacturing and Construction spending at 10:00. Tuesday, Factory orders and Auto sales. Wednesday, ADP employment index and ISM services. Thursday, the weekly Jobless claims, Productivity and Unit labor costs. Then of friday, Non-farm payrolls, the Unemployment rate and Consumer credit. Yes, it's FOMC week too. On monday FED associate director Greenlee testifies before Congress at 11:30, then FED governor Tarullo gives a speech at the UofMD at 3:00, and the Foreign exchange rates are reported. On tuesday the FOMC meeting begins and on wednesday the FED releases their statement. Best to your weekend and week!
10月30日 friday updateSHORT TERM: OEW 1061 pivot holds and market resumes slide, DOW -250
Overnight the Asian market were mostly higher. Europe opened higher but closed -2.65%. US index futures were slightly lower overnight. At 8:30 Personal income was reported flat: 0.0% v +0.1%, and Consumer spending was reported lower: -0.5% v +1.4%. The market opened slightly lower at SPX 1063, and dipped down to 1058 when the Chicago PMI was reported higher: 54.2% v 46.1%. The market then rallied to SPX 1062 by 10:00 when Consumer sentiment was reported higher: 70.6% v 69.4%. After that the USD index started to rally and the stock market headed lower. By 11:30 the SPX broke through the OEW 1061 pivot and continued lower. By 12:30 the SPX was within range of the OEW 1041 pivot. Then at 1:30 the SPX hit 1035, a new low for the decline, and tried to rally. The SPX rallied back to 1043 by 2:00 as it was now straddling the OEW 1041 pivot. As the market started heading lower again the FED made the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20091030a.htm. At 3:00 the SPX made a new low for the day at 1034, still within the 1041 pivot range. Then the FED made the following press release: http://www.federalreserve.gov/newsevents/press/bcreg/20091030b.htm. For the day the SPX/DOW were -2.65% and the NDX/NAZ were -2.55%. Bonds were up 28 ticks, Crude dropped $2.95, Gold slipped $1.00, and the EUR was lower. Support for the SPX drops to 1018 and then 990, with resistance now at 1041 and then 1061. Short term momentum remained extremely oversold into the close. Wednesday and thursday, btw, was the 80th anniversary of the 1929 crash.
Yesterday's strong rally ended within the range of the OEW 1061 pivot. Today the market reversed yesterday's entire rally and made a new low for the decline at 1034. This represents a 67 point decline from the SPX 1101 high, the largest drop since the uptrend began in early July. The count we have been following from the SPX 1101 high continues to track the market: wave 1 SPX 1074, wave 2 SPX 1096, and wave 3 underway. Wave 3 has been subdividing as follows: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042, wave 4 SPX 1067 and wave 5 currently reaching SPX 1034. At today's low the short term charts are sufficiently oversold to end wave 3, and the hourly chart is displaying a slight positive divergence. The VIX, btw, is now in an uptrend. Best to your weekend!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market
Love oneself, or love oneself and all others. It's a choice.
Your future depends on it. Time is short. Make the choice! 10月29日 thursday updateSHORT TERM: market rebounds on strong Q3 GDP report, DOW +200
Overnight night all the Asian markets were lower. Europe opened lower but closed +1.40%. US index futures were slightly higher overnight. At 8:30 Q3 GDP was reported at +3.5% v -0.7%, weekly Jobless claims came in at 530K v 531K, and at 9:00 FED governor Tarullo gave testimony before Congress: http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm. The market responded positively right after the reports and gapped up at the open to SPX 1048. That was the low for the day. By 12:30 the SPX had rallied back to the 1061 OEW pivot, consolidated for a while, and then rallied to the high for the day at 1067 by 3:00. It then pulled back a few points at about 3:30 before closing near the high for the day at SPX 1066. Quite a rally as the USD index declined as well. For the day the SPX/DOW were +2.15%, and the NDX/NAZ were +1.80%. Bonds dropped 15 ticks, Crude rallied $2.55, Gold jumped $16.00 and the EUR was higher. Support for the SPX now jumps back up to 1061 and then 1041, with resistance at 1090 and then 1107. Short term momentum was overbought at the close. Tomorrow, Consumer spending and Personal income at 8:30. Then the Chicago PMI at 9:45 and Consumer sentiment at 10:00.
Quite a rally today from extreme oversold levels and the OEW 1041 pivot. The USD index declined about 0.80%, and nearly everything that moves inversely to the USD rallied. Despite the sharp rally our short term count remains intact. Today's rally appears to be a smaller fourth wave within the larger third wave decline from SPX 1096. We have been counting this decline as: wave 1 SPX 1074, wave 2 SPX 1096, and wave 3 underway. Within wave 3 we have been counting: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042 and wave 4 underway today. Should the SPX rally above 1075 it would invalidate this count. The market continues to be quite choppy as sellers and buy the dip buyers battle it out. The DOW displays a much choppier downside pattern than the SPX. With the market close at SPX 1066 and today's rally still within the range of the 1061 pivot one can still favor the downside from here with tight stops. Best to your trading!
MEDIUM TERM: uptrend in jeopardy
LONG TERM: bear market
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