Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Update

Stock-Markets / Dow Theory Dec 19, 2009 - 11:41 AM GMT

By: Tim_Wood

Stock-Markets

Best Financial Markets Analysis ArticleThe Dow theory bullish trend confirmation that occurred earlier this year remains intact.   Cyclically, the higher degree low that began at the March low also still remains intact.  Longer-term, I maintain, based on my data, that this is nonetheless a bear market rally.  Once this rally has run its course the big surprise will be the Phase II decline and history shows us that Phase II declines are the most destructive.  One reason for this is because with everyone believing that the bear market has ended, the Phase II decline takes everyone by surprise and as the realization begins to set in so does the panic.


In the first chart below I have included the Dow Jones Industrials and the Transports.   From a Dow theory perspective there are no non-confirmations and all appears fine.   It is the longer-term aspects of Dow theory, which are not shown on this chart, that are problematic.   Those problematic issues being the traditional bull and bear market relationships and values, both of which I have written about in recent postings here. 

Next I have included a daily chart of the S&P 500 along with my Intermediate-Term Total Market Advance Decline line.   The issue here is that the internals are beginning to break down in that the price action over the last 3 months has not been confirmed by this indicator.  As a result, a divergence or non-confirmation has formed.   These non-confirmations are not sell signals in and of themselves.  Rather, they are warnings that something is not right.  It is my intermediate-term Cycle Turn Indicator that I watch in order to trigger intermediate-term buy and sell signals. 

In the next chart below I have included a daily chart of the S&P 500 along with my Intermediate-Term Total Market Volume Indicator.   Again, the issue here is that the internals are breaking down in that the price action is not being confirmed by this volume indicator.  In this case we have two divergences or non-confirmations that have together grown into an even longer-term non-confirmation.  Note that the September high failed to exceed the previous high.  Then, from that point, this indicator has continued to weaken even further and has recently moved to an 8 month low.   As a result, an even longer-term divergence or non-confirmation has formed.  Again, these non-confirmations are not sell signals in and of themselves.  They are warnings that price is no longer being confirmed by the internals.  It is because divergences are only warnings that I rely on my Intermediate-term Cycle Turn Indicator to trigger intermediate-term buy and sell signals.


Next I have included a chart of the Banking Index.  Note that this index lead at the 2007 top and that it is now showing less relative strength than the broader market.  Again, this is not in and of itself a sell signal, but yet another warning. 



Next, I’ve also included a chart of the Philadelphia Housing Index and here too, we are beginning to see a softening.


My point here is that all is not well when we look beyond the surface.   There are signs for those with the eyes to see them.  The internals are no longer confirming the market.  Banking and housing are but a couple of examples of relative weakness, which also serve as warnings.   Yet, the mainstream media and politicians have the masses lulled to sleep.  In my opinion this is a great disservice as it only helps to set the stage for the slaughter that will ultimately follow once the Phase II decline begins.  In the meantime, the longer this bear market rally lasts, the more damaging it will ultimately be once it is over.     You have been Warned! 

I have begun doing free Friday market commentary that is available at
www.cyclesman.info/Articles.htm so please begin joining me there.  The specifics on Dow theory, my statistics, model expectations, and timing are available through a subscription to Cycles News & Views and the short-term updates.  I have gone back to the inception of the Dow Jones Industrial Average in 1896 and identified the common traits associated with all major market tops.  Thus, I know with a high degree of probability what this bear market rally top will look like and how to identify it.  These details are covered in the monthly research letters as it unfolds.   I also provide important turn point analysis using the unique Cycle Turn Indicator on the stock market, the dollar, bonds, gold, silver, oil, gasoline, the XAU and more.   A subscription includes access to the monthly issues of Cycles News & Views covering the Dow theory, and very detailed statistical based analysis plus updates 3 times a week.

By Tim Wood
Cyclesman.com

© 2009 Cycles News & Views; All Rights Reserved
Tim Wood specialises in Dow Theory and Cycles Analysis - Should you be interested in analysis that provides intermediate-term turn points utilizing the Cycle Turn Indicator as well as coverage on the Dow theory, other price quantification methods and all the statistical data surrounding the 4-year cycle, then please visit www.cyclesman.com for more details. A subscription includes access to the monthly issues of Cycles News & Views covering the stock market, the dollar, bonds and gold. I also cover other areas of interest at important turn points such as gasoline, oil, silver, the XAU and recently I have even covered corn. I also provide updates 3 times a week plus additional weekend updates on the Cycle Turn Indicator on most all areas of concern. I also give specific expectations for turn points of the short, intermediate and longer-term cycles based on historical quantification.

Tim Wood Archive

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


Comments

PJ
19 Dec 09, 13:53
Amnesia?

> The Dow theory bullish trend confirmation that occurred earlier this year remains intact. 

22nd March http://www.marketoracle.co.uk/Article9580.html

> In my opinion, this re-inflation effort is ultimately not going to work any better than any of the previous efforts. The technical damage that has been done over the last couple of years is not something that can be fixed by some stimulus package. The equity markets are still operating within the context of a massive secular bear market and the bounce that is currently underway is nothing more than a bear market rally. The commodity bubble is a thing of the past, even though this counter trend bounce still likely has further to run and the decline in the dollar was totally expected based on my cycles work. So, at this time I'm not seeing anything out of the ordinary or that wasn't expected based on my cyclical work.

So no matter if the stock market even retraces 100% of the decline, will it sitll always be a bear market rally?


Post Comment

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

6 Critical Money Making Rules