Weekend update

REVIEW

The market started the week at SPX 2786. After a Monday holiday, the market gapped up on Tuesday to new highs (2808), then pulled back to 2769 before rebounding in the afternoon. Wednesday had another gap up opening, but the high was only 2807. Thursday the market traded above/below SPX 2800 all day with little upside progress. Friday had another gap up opening, pulled back, and then closed at an all-time high SPX 2810. For the week the SPX/DOW gained 0.95%, and the NDX/NAZ gained 1.05%. Economic reports were mostly lower. On the downtick: NY/Philly FED, home builders index, housing starts, building permits, and consumer sentiment. On the uptick: industrial production, capacity utilization, plus weekly jobless claims improved. Next week’s reports will be highlighted by the Q4 GDP report.

LONG TERM: uptrend

Back in 2016, with the SPX trading around 2000-2100 very few expected a SPX 3000 in the next couple of years. Our analysis, at that time, suggested a SPX 3000-3600 in the next 2-4 years. With the SPX hitting 2800 this week, a 1000 points above the 2016 low, SPX 3000 is no longer that far away.

The count remains the same. A Major 1 bull market underway with five Intermediate waves. Intermediate waves i and ii completed in the spring of 2016. Intermediate iii then started to divide. Minor waves 1 and 2 completed in the fall of 2016, and Minor waves 3 and 4 completed in the spring of 2017. Minor wave 5 has been underway since then.

MEDIUM TERM: uptrend

The current uptrend, Minor wave 5, is one of the longest uptrends, without a correction, in many years. In fact, the last time the market had an uptrend this long was in the early 1980’s. The internal structure of a Minor wave 5 is quite naturally five Minute waves. Minute waves i and ii completed in June/July, and Minute iii and iv completed in November. Minute v of Minor 5 has been underway since then.

Reviewing the daily chart above, you will note the RSI/MACD negative divergences at every significant short wave during this uptrend. You will also note that the Micro waves (org.) were previously quite clear. But not so for this Minute v rally yet. In fact, the SPX has rallied 200 points without one quantifiable short term reversal. Quite a strong market! Medium term support is at 2798 and 2780 pivot, with resistance at the 2835 pivot.

SHORT TERM

As noted above. This rally has been so strong that it has failed to leave behind the normal short term quantifiable wave markers of this bull market. We have some, then more on a shorter timeframe, then a few that look like they should fit. The puzzle; basic: 2590-2578-2658-2606; shorter 2665-2625-2672-2652-2695-2674; fit: 2759-2736-2808-2769-2810.

A number of wave counts can fit the above price pattern. It is not about short term wave counts at this time. Think it more about the wave pattern, 15-waves, and the technical indicators. Both suggest higher prices ahead before a significant correction. Nevertheless we can count five up to 2665, a decline to 2625, then nine up to 2810 so far. And have posted this count. Short term support is at the 2798 and 2780 pivots, with resistance at the 2835 pivot. Short term momentum ended the week overbought. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly higher and gained 0.9%.

European markets were mostly higher and gained 0.3%.

The DJ World index gained 0.9%, and the NYSE gained 0.7%.

COMMODITIES

Bonds continue to downtrend and lost 0.6%.

Crude remains in an uptrend but lost 1.5%.

Gold is also in an uptrend but lost 0.1%.

The USD remains in downtrend and lost 0.5%.

NEXT WEEK

Wednesday: existing home sales. Thursday: jobless claims, new home sales and leading indicators. Friday: Q4 GDP (est. 3.0%) and durable goods.

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