Weekend update

REVIEW

The week started at SPX 2810. After a flat opening on Monday the market rallied, rallied again on Tuesday, then hit a temporary all-time high on Wednesday morning at SPX 2853. The market then pulled back into Wednesday afternoon to SPX 2825. Then after gap up openings on Thursday and Friday the market closed at SPX 2873. For the week the SPX/DOW gained 2.15%, and the NDX/NAZ gained 2.55%. On the economic front declining reports outpaced increases. On the downtick: existing/new home sales, Q4 GDP, plus weekly jobless claims rose. On the uptick: leading indicators and durable goods. Next week’s reports will be highlighted by the FOMC meeting and non-farm Payrolls.

LONG TERM: uptrend

The relentless rally continues. The last time the market had a downtrend was in March/April. Since then the market has experienced one solid 9-month uptrend, with pullbacks of 3% of less along the way. In fact, when reviewing the weekly chart, this uptrend looks entirely different than any other uptrend since 2009. Something new began after the February 2016 low, which fits with our Secular Primary III bull market scenario.

The wave count remains unchanged. Major wave 1 of Primary III began at the February 2016 low. Intermediate waves i and ii completed in the spring of 2016. Intermediate iii then divided into Minor waves. 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 under since the April 2017 low at SPX 2329. When Minor 5 ends, so too does Int. iii. Then after a short, and probably small, Int. iv correction, Int. v will take the market to new highs again.

MEDIUM TERM: uptrend

The current uptrend, Minor 5, is only few days away from entering its 10th month. No uptrend has been this long since the mid 1980’s. Naturally this Minor wave is dividing into five Minute waves. Minute waves i and ii ended in June/July, Minute waves iii and iv ended in November, and Minute wave v has been underway since then.

While we did not have too much trouble tracking Minute waves i thru iv. Minute wave v has been a bit difficult due to its relentless rise and small pullbacks. Very few short term waves have been quantified using our technique. This allows for a number of potential short term counts. Nevertheless we present one below which we have been tracking for a couple of weeks. Medium term support is at the 2858 and 2835 pivots, with resistance at the 2884 pivot.

SHORT TERM

We can now count 17 waves up from the Minute iv SPX 2557 low in November. The first 11 waves can be quantified, the next six waves cannot. The most obvious count under this scenario is a five Micro wave advance underway, with Micro waves 1 and 2 ending at SPX 2665 and 2625 in early December. Since then Micro wave 3 has been underway: 2672-2652-2695-2674-2759-2736-2808-2769-2853-2825-2873 so far. Eleven waves, suggesting a pullback then new highs to make thirteen waves, and possibly end Micro 3. In other words, still no signs of an uptrend top yet.

Short term support is at the 2858 and 2835 pivots, with resistance at the 2884 pivot. Short term momentum ended the week with a potential negative divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were mostly higher and gained 1.2%.

European markets were mostly higher but gained only 0.1%.

The DJ World index gained 2.0%, and the NYSE gained 1.9%.

COMMODITIES

Bonds remain in a downtrend and lost 0.2% on the week.

Crude remains in an uptrend and gained 4.5%.

Gold also remains in an uptrend and gained 1.4%.

The USD remains in a downtrend and lost 1.6% on the week.

NEXT WEEK

Monday: personal income/spending and the CPI at 8:30. Tuesday: Case-Shiller and consumer confidence. Wednesday: the ADP, Chicago PMI, pending home sales, and FOMC statement. Thursday: weekly jobless claims, ISM, construction spending and auto sales. Friday: monthly payrolls, consumer sentiment, and factory orders.

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