Weekend update

REVIEW

The week started at SPX 2902. After Monday’s Labor day holiday the market had gap down openings on Tuesday, Wednesday and Friday. Each day of the week the SPX made a lower low: 2885, 2877, 2867 and 2864. For the week the SPX/DOW lost 0.60%, and the NDX/NAZ lost 2.75%. Economic reports for the week were mixed. On the downtick: auto sales, the ADP, factory orders, and the trade deficit increased. On the uptick: monthly payrolls, ISM manufacturing/services, construction spending, and weekly jobless claims improved. Next week’s reports will be highlighted by the CPI/PPI, retail sales, the beige book, and industrial production. Best to your week!

LONG TERM: uptrend

The indices we have been tracking did not make any upside progress this week. In fact all of them lost ground as the market pulled back. The DOW was down 0.2%, the NYSE -0.8%, and the DJ World -1.9%. We still expect all three of these indices to make all time new highs, just like the SPX did recently, before the bull market ends.

The long-term count remains the same. A Major wave 1 bull market has been underway since February 2016. Major wave bull markets consist of five Intermediate waves. Intermediate waves i and ii completed in the spring of 2016. Intermediate waves iii and iv completed in the spring of 2018. Intermediate wave v has been underway since that April low. We still expect the SPX to reach 3000+ by 2018+ before the bull market ends.

MEDIUM TERM: uptrend

The Intermediate wave v uptrend entered its fifth month this week, as it started in early April. We are expecting the uptrend to unfold in five Minor waves. And it appears those minor waves are quite lengthy and subdividing – the reason for the length of this uptrend.

Minor waves 1 and 2 ended in June at SPX 2791 and SPX 2692 respectively, and Minor wave 3 underway since then. Currently Minor 3 (225 pts.) is slightly shorter than Minor 1 (237 pts.), and also does not look complete. We have been counting SPX 2863 and SPX 2802 as Minute waves i and ii, and the SPX 2917 all-time high as the first wave of Minute iii. See hourly chart below. SPX 2917 could have actually been all of Minute iii, even though it is quite short compared to Minute i. Suggesting Minute v would also be quite short, and probably top around the OEW 2929 pivot. If the SPX drops below 2863 that possibility is eliminated.

SHORT TERM

As noted earlier Minute waves i and ii of Minor wave 3 completed at SPX 2863 and SPX 2802 respectively. Minute wave iii has been underway since then. While Minute i subdivided into five quantified waves. Minute iii has thus far not subdivided at all. It has been one straight up rally. Leading us to believe it is only the first wave of Minute iii, and this pullback is wave 2.

After this pullback concludes the market should rally to higher all-time highs. Short term support is at the 2858 and 2835 pivots, with resistance at the 2884 and 2929 pivots. Short term momentum ended the week with a positive divergence. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower for the week and lost 2.0%.

European markets were also all lower and lost 3.0%.

COMMODITIES

Bonds continue to uptrend but lost 0.4% for the week.

Crude appears to be in an uptrend, but lost 2.9% on the week.

Gold appears to be in an uptrend too, but lost 0.5% on the week.

The USD appears to be in a downtrend and lost 0.1% on the week.

NEXT WEEK

Monday: consumer credit at 3pm. Tuesday: wholesale inventories. Wednesday: the PPI and the Beige book. Thursday: jobless claims, the CPI, and the budget deficit. Friday: industrial production, retail sales, consumer sentiment and business inventories.

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