Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
So, Where Is Gold's Corrective Upswing? - 7th Mar 21
US Treasury Yields Rally May Trigger Stock Market Crazy Ivan Event - 7th Mar 21
The Great Reset Is Coming for the Currency - 7th Mar 21
Gold Continues Declines on Bond Yield Jitters - 7th Mar 21
The Case for Inflation - 7th Mar 21
Dow Short-term Stock Market Trend Analysis - 6th Mar 21
Intel Rocket Lake EXPLODE on Launch - 11th Gen CPU's RUN VERY HOT Bad Cinebench R20 Scores - 6th Mar 21
US & UK Head for Post Coronavirus Pandemic Lockdown Inflationary Economic BOOM - 6th Mar 21
FED Balance Sheet Current State - 5th Mar 21
The Global Vaccine Race Against Time and Variants - 5th Mar 21
US Treasury Yields Rally May Trigger A Crazy Ivan Event (Again) In Stock Market - 5th Mar 21
After Gold’s Slide, What Happens to Miners? - 5th Mar 21
Racism Pandemic Why UK Black and Asians NOT Getting Vaccinated - NHS Covid-19 BAME - 5th Mar 21
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Cycle Turning Points Analysis 1st July 2007

Stock-Markets / Cycles Analysis Jul 01, 2007 - 04:17 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market.

SPX: Long-Term Trend - The 12-year cycle is still in its up-phase but, as we approach its mid-point some of its dominant components are topping and could lead to a severe correction over the next few months.

SPX: Intermediate Trend - Intermediate cycles are causing a consolidation/correction in the uptrend which could last a few more weeks.


Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which determines the course of longer market trends.

Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know at ajg@cybertrails.com .

Over the past month, large cap indices have established a consolidation pattern consisting -- so far -- of a double top and a double bottom. For the SPX, this represents about a 55 point range whose low was successfully tested last week in conjunction with the bottoming of a short-term cycle. This caused a rebound into Friday where it met, once again with selling about half way through its range. The Russell 2000 pattern is slightly weaker with a series of descending tops, and the Nasdaq slightly
stronger.

Intermediate term cycles which are due to make their lows over the next few weeks are responsible for temporarily arresting the uptrend. They are not expected to bring about much weakness, but by the time they bottom, the trading range of the SPX should be broken to the downside.

One sector which is pressuring the market is the banking sector. The subprime mortgage fiasco which is unfolding is creating a negative chart pattern for this index, and one could even argue that it established a long-term top in February. I say unfolding, because some believe that it will get much worse and, according to John Mauldin, may reach losses of $250 billion. But, with the Fed
assuring us that this weakness will not spread to the rest of the economy, and the belief that if it does, the Fed will come to the rescue, the market does not seem to be overly concerned at this time. Part of the reason is that the psychological climate is not ripe for investors to worry about this or any other problem. It could be different by year end and going into next year, as longer term cycles roll
over.

The influence of the BKX is primarily on the SPX, and this is one of the reasons why the Nasdaq is stronger technically. The latter is being helped by a recent rash of excellent earnings reports by tech stocks. On Friday, the NDX came very close to its former high, and although it has slowed its rise during this consolidation, it is still making a pattern of higher highs and higher lows.

Last week, I mentioned that crude oil was on the rise again and that the Point & Figure chart suggested that the continuous contract could see $75 before long. Last week it rose to $71 and still looks higher. But while its rise in price had a psychological impact when it first reached $80 a year ago, little seems to be made of it this time around -- and probably for the same reason as that given
above.

What’s Ahead?

Momentum:
We'll continue to examine the same SPX chart (courtesy of StockCharts) in order to give a continuity to our analysis.

I have drawn some channels to identify the various trends. The up-trending red channel was broken when the index began its consolidation. The broader blue channel may represent the current trend. If this is so, the index will eventually find the bottom trend line or go slightly beyond by the time it makes its low.

The MACD (at the bottom) has gone from a very overbought condition to slightly negative. At this time, it does not look quite ready to turn back up. The other momentum indicator at the top is the RSI. You can see that it has stabilized at a neutral reading. I would expect it to become more oversold before the consolidation ends.

The first decline was arrested by the 50 DMA , but the index is now trading below it. This is causing the MA to slow its rise and potentially begin to roll over. The 200 DMA is still far below and not threatened in any way.

The overall chart pattern suggests that more consolidation is needed, which is consistent with the current cycle outlook.

Cycles
A short-term cycle which made its low on 6/27 caused the short-term decline into that time frame. It was also the cause of the rebound which took place over the next two days. Friday's action was more erratic and volatile than normal because of the end-of-quarter activity, but it looks as if the rally came to an end for the SPX at 1517 in the first hour of trading on Friday.

This is what a subsequent decline of 23 points for the rest of the day suggests. I suppose that you could blame it on volatility, but it looks a little excessive. Since the 2.5-week cycle is due to make its low right around 7/4, it could be the cause of the retracement and it could also bottom early. The first few days of July are historically bullish.

Two more short-term cycles, the 6-week and 20-day, are scheduled to bottom early the following week so near-term, there are more reasons for the market to go down than up.

The 20-week cycle should ideally keep the market under pressure until about the 4th week in July. This cycle on its own does not always produce much of an impact. But this also represents the 80- wk cycle low, and it will be further reinforced by the bottoming of the 4.5-yr cycle. The only question is whether the 4.5-yr will make its low exactly at the same time or a little later. Some see a low in
mid-August. We'll just have to let the market tell us.

If all these cycles arrive at the prescribed time, it would be difficult for the market to muster any kind of an uptrend before the end of July, at the earliest. But remember that what comes down also goes up, afterwards! This is when it will get interesting because even longer cycles will be in a position to turn down by then, and they may not exert enough influence on the market to keep it from making a new high.

Projections
From the last newsletter:
From the lows made last week, we can establish confirming counts and Fibonacci projections both to 1538 and to 1560. 1538 was reached on Friday and stopped the advance. We'll see next week if it's only temporary or longer lasting.

The 1538 projection did establish the peak of the rally from 6/08. The Morning Comment this past Thursday stated the following:

Yesterday's close was right at a resistance point and this may cause a pause in the rally. The market may also want to wait for the Fed decision which is due later on today. Over the next few days, the SPX should continue to trend higher. Another pause at 1510-11 is likely, and then 1516-17. After that level is reached, we'll reassess the short-term trend to see if it is beginning to form a topping pattern which will mark the end of the rally.

The Fed decision, which was received favorably by the market, took the SPX a little past 1511 and the next day it reached the second projection at 1517. As discussed above, this looks like an important enough reversal to put a short-term top in place. The only thing that bothers me is that the advance/decline managed to remain in its short-term uptrend. It could mean additional distribution
will be needed before the SPX can head lower.

Concerning projections for the intermediate-term low, I have nothing solid at this point. 1464 seems reasonable if we can make a decisive penetration of the 1488 level. The first attempt was stopped at 1485 on 6/27. It if is challenged again in the next two weeks, it should be penetrated this time.

Breadth
This is where the relative strength of the Nasdaq to the SPX shows up very clearly. While the NYSE summation index is plunging, the Nasdaq index has gone into a sideways pattern. The reason for this dichotomy was discussed above. With the cycles that lie ahead, it will be interesting to see how this disparity resolves itself.

Market leaders & Sentiment
Remember this chart which I posted last time? This is the updated version:

On Friday, its reading reached 197, which prompted me to issue this update:

----- Original Message -----
From: Andre Gratian
Sent: Friday, June 29, 2007 10:43 AM
Update
Be very cautious here! The ISEE (put/call indicator) that I mentioned in a former report is flashing its most negative signal in MONTHS. It may be a little early, but this does not look good for the market here. With this signal, it's entirely possible that we may have seen the high of the rally this morning. I have not followed it closely enough to know if there is a lead time to this indicator and how much, but I don't think it's that much.
Andre

At the time, the SPX was trading at 1514. Less than 2 hours later it made a low or 1494 (a good example of the advantage of receiving intra-day updates in this volatile market environment). By the close on Friday, the index had come down to 161. Nevertheless, this is still a relatively high reading and suggests that more selling probably lies ahead.

Summary
Written in the last newsletter: All signs are pointing to an imminent intermediate market top which should bring about a decline of 5 to 8 weeks. This top could come as early as next week. Looks like it came right on time! Longer term cycles suggest that the low is still at least 4 to 6 weeks away.

I must point out, however, that some Elliott Wave technicians believe that the low may already have been made and that the SPX may be ready to move to new highs right away.

By Andre Gratian
MarketTurningPoints.com

If this information is of value to you, you should consider our trial subscription offer (above). Daily updates consist of a Morning Comment, Closing Comment (which occasionally includes an updated hourly chart of the SPX to illustrate the analysis), and at least one or more updates during the trading session whenever it is warranted by market action. These updates discuss phase completions, give projections, potential reversal points, and whatever else may be pertinent to the short-term trend.

“By the Law of Periodical Repetition, everything which has happened once must happen again, and again,
and again -- and not capriciously, but at regular periods, and each thing in its own period, not another’s, and
each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature
which orders the affairs of the earth. Let us not underrate the value of that hint.” -- Mark Twain

You may also want to visit the Market Turning Points website to familiarize yourself with my philosophy and strategy.www.marketurningpoints.com

Andre Gratian Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules