Table of Contents

SPY Pro system discussion and clarification for how we are going to trade this

1. Glance at last Week Stats, Upcoming Economic Table, Earnings Release Dates (long term economic indicators)

2. Review of the Major Indexes Big Picture, BPT 401K Systems, and Short Term

3. Custom Indicators and Quick Overview of Bonds via TLT and HYG, Yield Curve

4. FANG Stocks

5. Bonds via TLT and HYG, 10 Year Yield

6. Commodities (Crude Oil, Natural Gas, Copper

7. Precious Metals (US Dollar, Gold/Silver) and GDX 

I hope everyone had a nice weekend so far!  On Monday the bond market closes early at 2 pm, however the regular cash market is open for a full day, and of course the market is closed on Tuesday for New Years.

I'm not going to write too much text here as I will be covering my thoughts in me detailed audio transcription so please listen to the full newsletter audio. In short as you know 2018 has been a wild ride for the market with two major corrections; one in Feb/Mar, and one from Oct to present. The market was negative for the year in Feb after that sharp fast 12% correction, and was then up nicely for the year in early fall up about 11 - 14%, and now is down -7% - 14% for the year depending on the index. Thus it's been a wild roller coaster ride.  In 2017 the market experienced it's lowest volatility in history, and as Steve and I predicted, 2018 would be a very volatile year and boy was it ever! 

Long term analysis:  The market made a significant top in September and is in a bear market with this being the first initial decline. We expect the bear market to continue into 2019 and make new lows, with conservative target areas for the SPX in the low 2000 range.  I also expect the Dow Jones to re-test and to at least slightly undercut its 200 week MA.

Short term analysis:  The market probably put in an initial wave A low last week on Christmas Eve. It's also possible that it hasn't yet and that this bounce is simply a 4th wave bounce with one more sell off coming in a wave 5 to finally complete this initial wave A of the bear market, however we lean that wave A is in.  We should now be in some sort of Initial wave B bounce that will be choppy and should work higher over time, but will ultimately form a lower high early next year.  Mark sure to also to pay attention to the symmetry moves that the indexes made last week - I discuss this on the daily index charts below; eventually the move into Friday's highs matched a prior symmetry move.

As you saw over the last week, we saw many extremes in various technical indicators that we follow; such as the percentage of stocks in the SPX above their 20 EMA, 50 SMA, and 200 SMA's.  The CPC put/call ratio hit an all time record high on the previous week, the New Lows indicators also had huge spikes, and various fear sentiment indicators were at extremes. This all points to a potential wave A low for now.  However as I will show below, in almost all cases while the market has had trade bottoms after extreme readings in these indicators, it has almost always made new lows weeks to a few months later. That also fits with our bear market scenario where this has been the initial down leg of the bear market and we expect the next good rally to form a lower high, followed by another decline to test the lows or make new lows. 

let's get to the charts

Matt

Week of December 31 - January 04

Date	ET	Release	For	Actual	Briefing.com Forecast	Briefing.com Consensus	Prior	Revised From
Jan 02	07:00	MBA Mortgage Applications Index	12/29		NA	NA	NA
Jan 03	08:15	ADP Employment Change	Dec		190K	170K	179K
Jan 03	08:30	Continuing Claims	12/29		NA	NA	1701K
Jan 03	08:30	Initial Claims	12/29		218K	220K	216K
Jan 03	10:00	Construction Spending	Nov		0.1%	0.3%	-0.1%
Jan 03	10:00	ISM Manufacturing Index	Dec		57.3	57.8	59.3
Jan 03	14:00	Auto Sales	Dec		NA	NA	4.01M
Jan 03	14:00	Truck Sales	Dec		NA	NA	9.48M
Jan 04	08:30	Nonfarm Payrolls	Dec		190K	180K	155K
Jan 04	08:30	Nonfarm Private Payrolls	Dec		185K	175K	161K
Jan 04	08:30	Avg. Hourly Earnings	Dec		0.3%	0.3%	0.2%
Jan 04	08:30	Unemployment Rate	Dec		3.7%	3.7%	3.7%
Jan 04	08:30	Average Workweek	Dec		34.5	34.5	34.4
Jan 04	10:30	EIA Natural Gas Inventories	12/29		NA	NA	-48 bcf
Jan 04	11:00	EIA Crude Oil Inventories	12/29		NA	NA	-0.05M

Actual refers to the actual figures after their release.

Briefing.com Forecast refers to Briefing.com's forecast.

Briefing.com Consensus represents the market consensus estimate for each indicator.

Prior represents the last actual for each indicator. In cases where the release is a revision to an earlier estimate, as is possible with GDP, productivity, and U of Michigan sentiment, the last actual refers to the preliminary estimate for the same period. After a report is released, the Prior column reflects the prior figure as revised.

The Revised From column lists the prior number as it was originally reported, ie before revision.

Not included: Mitsubishi and Redbook chain store indexes are released every Tuesday morning. M2 is released every Thursday at 16:30 ET.

Stock Earnings Calender:

Click here for a list of Stocks that are reporting Earnings

**Generally we never hold a position into earnings since the risk/reward is too great