Weekend update

REVIEW

A difficult equity market continues. The week started at SPX 2747. After a gap up opening on Monday the market rallied to SPX 2789 by Tuesday morning. That was the high for the week as a selloff began shortly after that high. Despite a gap up opening on Wednesday the market ended near SPX 2700 that day, traded down below 2700 on Thursday, and down to 2647 Friday morning. A drop of 5% in just four days. A bounce on Friday ended the week at SPX 2691. For the week the SPX/DOW lost 1.55%, and the NDX/NAZ lost 1.15%. Economic reports for the week were mixed. On the downtick: pending/new home sales, durable goods, Q4 GDP, Chicago PMI, and consumer sentiment. On the uptick: Case-Shiller, consumer confidence, personal income/spending, the CPI, ISM, and jobless claims improved. Next week will be highlighted by monthly payrolls and the FED’s beige book.

LONG TERM: uptrend

Just when it began to look like February’s 12% selloff was enough to end Intermediate wave iv. And the SPX had started Int. wave v. with a 10% rally off that low. The market made another volatile reversal and dropped 5% in just four days. This action would not have been too surprising, if it weren’t for the perfect technical setup at the low and the
WROC trigged in its aftermath. It’s tough to make a call in either direction at this point. But we still favor the Int. wave v underway scenario.

The long term wave pattern remains unchanged. Primary II ended in early 2016, and a Major wave 1, of Primary III, began at that time. Major wave 1 is dividing into five Intermediate waves. Int. waves i and ii completed in the spring of 2016. Intermediate wave iii then started to subdivide. Minor waves 1 and 2 ended in the fall of 2016. Minor waves 3 and 4 ended in the spring of 2017. Then a lengthy Minor wave 5, of Int. iii, ended in January. After that the above noted 12% selloff occurred which should have ended Int. iv.

MEDIUM TERM: still favor uptrend underway

After reaching the current Int. wave iv low at SPX 2533. The market rallied strongly to 2754, pulled back to 2698 in three waves, then rallied again to 2789. All looked fine for an uptrend underway scenario until the market reversed hard off that second high on Tuesday. Then it cascaded its way down 140+ points by Friday to SPX 2647. The volatility witnessed throughout most of February reemerged at the beginning of March.

This week’s activity allows for a second short term count to emerge: an ongoing Int. iv. Under this scenario the February low at SPX 2533 is Minor wave A, SPX 2789 is Minor B, and Minor C is underway. When it concludes, probably after retesting SPX 2533, then Intermediate wave v would begin. Medium term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots.

SHORT TERM

As noted earlier we are still favoring an ongoing uptrend from the February SPX 2533 low. Minor wave 1 would be SPX 2754, and Minor 2 would now be an irregular zigzag: 2698-2789-2647 so far. At SPX 2647 Minor wave 2 has retraced about 50% of Minor 1. Any further downside activity would naturally make this count even more questionable.

Volatile, fast moving, choppy market. Short term support is at the 2656 and 2632 pivots, with resistance at the 2731 and 2780 pivots. Short term momentum is rising off a positive divergence at Friday’s lows. Best to your trading!

FOREIGN MARKETS

Asian markets were all lower and lost 1.6%.

European markets were also all lower and lost 3.7%.

The DJ World index lost 2.3%, and the NYSE lost 2.5%.

COMMODITIES

Bonds remain in a downtrend and finished the week flat.

Crude is in a downtrend and lost 3.7% for the week.

Gold also in a downtrend and lost 0.5% on the week.

The USD appears to be in an uptrend and gained 0.5% on the week.

NEXT WEEK

Monday: ISM services. Tuesday: factory orders. Wednesday: the ADP, trade deficit, Beige book and consumer credit. Thursday: weekly jobless claims. Friday: monthly payrolls and wholesale inventories

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