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weekend update
REVIEW
The SPX/DOW crossed two milestones on Friday: SPX 1600 and DOW 15,000. That is exactly what kind of uptrend this has been: relentless. For the week the SPX/DOW gained 1.90%, and the NDX/NAZ gained 3.35%. Asian markets gained 0.3%, European markets gained 2.5%, and the DJ World index gained 1.7%. On the economic front investors were pleased with the FOMC statement, the ECB rate cut, and the monthly Payrolls report. Statistically, improving reports outpaced declining reports 11 to 7. It was a busy week! On the downtick: factory orders, ISM services/manufacturing, the Chicago PMI, construction spending, the ADP index, and the Monetary base. On the uptick: personal income/spending, pending homes sales, Case-Shiller, consumer confidence, the payrolls report, the WLEI, investor sentiment, plus weekly jobless claims, the trade deficit and the unemployment rate all improved. Next week, a quiet one, we have consumer credit, wholesales inventories and the budget deficit.
LONG TERM: bull market
With the US market hitting all time highs this week it should be fairly obvious, to anyone who follows the market, that the bull has been in control since March 2009. There are those, of course, who want to call a top of a bear market rally top after every large pullback/correction. Opinions make markets. All bull markets seem to continue higher until nearly all bears have capitulated and the public plows funds into the market.
Bull markets also appear to move in three stages: smart money - institutional money – then public money. Unfortunately, as the public starts to make profits, and invest more funds. The smart money, who bought at the beginning, eventually become the sellers. Then the bull market tops and a new bear market begins. So it is quite important to be generally able to identify when this last transition is taking place. RN Elliott identified this investor psychology pattern with the Elliott Wave. OEW quantifies it.
Applying nearly 130 years of actual market data, several Saeculum and Secular cycles, inter-market relationships between asset classes, and the quantified wave patterns they have displayed. We have been labeling the March 2009 SPX 667 low as the end of a Super cycle bear market. The 58% decline in the SPX, (54% in the DOW), and a completed zigzag wave pattern, met our historical criteria for that low. What typically follows a low of that wave degree is a multi-generational Super cycle bull market lasting about 70+ years. We are calling it Super cycle wave 3.
Naturally this 70+ year super bull market will consist of many bull and bear markets. Just like the 1932-2007 Super cycle wave 1. The entire Super cycle wave unfolds in five Cycle waves. We are currently in Cycle wave [1]. The last Cycle wave [1] lasted five years and unfolded in five Primary waves. We have been expecting the same thing to occur in this Cycle wave [1].
Primary waves I and II completed in 2011, and Primary III has been underway since that low. Primary I divided into five Major waves with a subdividing Major wave 1. Primary III is following a similar path, only both Major waves 1 and 3 are subdividing. Major waves 1 and 2, of Primary III, completed in mid-2012. Major wave 3 has been underway since that low. Intermediate waves i and ii, of Major 3, completed in late 2012. Intermediate wave iii is still underway.
Upon completion of Int. iii, there will be an Int. iv correction, then an Int. v uptrend to complete Major wave 3. Then after a Major 4 correction, a Major 5 uptrend will complete Primary III. Lastly after a Primary IV correction, a Primary V uptrend will complete the Cycle wave [1] bull market. We currently estimate this should all occur by late-winter to early-spring of 2014. With an upside target of SPX 1650 to 1780. Stay tuned.
MEDIUM TERM: uptrend
This uptrend, Intermediate wave iii, started in mid-November 2012, after the Int. ii wave low at SPX 1343. When it had a tricky pattern at its beginning, an irregular Minor wave 2 flat. We never expected it would get trickier still in its later stages as well. Regardless, Intermediate wave iii is still extending and uptrending. Over the past couple of weeks we have been kicking around several potential patterns. Now with the uptrend in its sixth month the internal wave pattern is becoming quite clear. We have been carrying the count on the DOW charts, and just friday morning updated the SPX charts to the same count.
We have Intermediate iii naturally dividing into five Minor waves, but with a quite extended Minor wave 3: Minor 1 SPX 1424, Minor 2 SPX 1398, Minor 3 SPX 1597, Minor 4 SPX 1536, and Minor 5 underway. You can see the five Minute waves of the extended Minor 3 on the daily and hourly charts. This wave pattern satisfies what we have been observing on the 10 minute, hourly and daily charts. In both the SPX and the DOW. What we also find interesting is that each of the rallies was near a Fibonacci number: Minor 1 (81 pts,), Minute i, iii and v (133, 89 and 57 pts.). The numbers 55, 89 and 134 are Fibonacci numbers. Dropping the units we have 5, 8 and 13 which are Fibonacci numbers.
Currently Minor wave 5 has already advanced from SPX 1536-1618 (82 pts.). This makes it equal to Minor wave 1, and puts it in the range of the typical 80′s point rallies. The high side, using these Fibonacci numbers would be 1536 + 89 or SPX 1625. Anything above that and we are probably looking into the 130′s range, which is SPX 1666-1675. Quite amazing! On a conventional Fibonacci wave relationship we have the following numbers: @ SPX 1617, (already reached), Minor 5 = Minor 1; @ SPX 1658 Minor 5 = 0.618 Minor 3, and @ SPX 1667 Minor 5 = 1.618 Minor 1. So you can see the wave relationships and Fibonacci numbers all arrive in the same general zones: SPX 1616-1625 and SPX 1658-1675.
One additional point that may be considered. The two largest uptrends of the entire bull markets were 289 pts. and 281 pts. These occurred in the first two uptrends of the bull market. These numbers would project an Int. iii top between SPX 1624 and 1632. Which so happens to fit right around the OEW 1628 pivot, and the first price zone noted above. To conclude. The first zone of resistance now appears to be between SPX 1616 and 1635, with the second zone between 1658 and 1675.
SHORT TERM
Short term support is at the 1614 and 1576 pivots, with resistance at the 1628 pivot and SPX 1658-1675 zone. Short term momentum ended the week overbought, after hitting extremely overbought Friday morning. The short term OEW charts are positive from SPX 1582 with the reversal level at 1593.
When we review this Minor wave 5 rally from SPX 1536. We are counting the first rally to SPX 1597 as Minute i, the pullback to 1581 Minute ii, and the current advance Minute iii. So far the only observable pullback from the 1581 low occurred on Friday, from 1618- 1613. Let’s see if this extends into something more meaningful on monday.
Our technical indicators are displaying negative RSI divergences on the weekly charts. But the daily charts display no such divergences as of yet. We have seen, however, uptrends spike into a peak without any daily technical weakness before. To conclude. At the bare minimum we would expect a sharp pullback, 15-20 pts., to occur soon. Then another rally to new highs before Minor wave 5 can end. Best to your trading!
FOREIGN MARKETS
The Asian markets were mostly higher on the week for a gain of 0.3%. China, Hong Kong and S. Korea remain in downtrends, with the latter two improving.
The European markets were all higher on the week for a gain of 2.5%. All eight indices, quite amazingly, are now in uptrends.
The Commodity equity group were all higher on the week for a gain of 2.0%. Brazil, Canada and Russia are all in downtrends, with the latter two improving. This is quite a reversal from even a week ago when 70% of the world indices we track were in downtrends. Now it is only 30%.
COMMODITIES
Bonds were having a good week, in their uptrend, until Friday. They ended with a 0.2% loss on the week.
Crude remains as volatile as ever, still in a downtrend but improving, gaining 2.8% on the week.
Gold has appeared to stabilize, somewhat, in its downtrend gaining 0.5% on the week.
The USD looks to be starting an uptrend but lost 0.5% on the week.
NEXT WEEK
Economic reports, sparse as they are, start off on Tuesday with Consumer credit. Thursday: weekly Jobless claims and Wholesale inventories. Friday: the Budget deficit. On Friday FED chairman Bernanke gives a speech on Monitoring Finance. Best to your week!
CHARTS: http://stockcharts.com/public/1269446/tenpp
Filed under: weekend update 
Source: https://caldaro.wordpress.com/2013/05/04/weekend-update-395/
