Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Correction Could be the Start of Something Bigger

Stock-Markets / Stock Markets 2010 Jan 31, 2010 - 05:56 PM GMT

By: Andre_Gratian


Best Financial Markets Analysis ArticleCurrent Position of the Market
SPX: Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2014. This would imply that lower prices lie ahead. As illustrated by the current market performance, this will not be a straight-down decline, but will consist of a series of intermediate-term rallies and declines until we have reached the low point.

SPX: Intermediate trend - The index made a high at 1150.45 on 1/19 and has been in a downtrend ever since. There is a possibility that this may only be a correction in an uptrend, and not the beginning of an intermediate decline.

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 .


After many weeks of frustrating the bears, the market finally reversed when it reached 1150.45. I had projected 1135 for a top, and if surpassed, 1155-60. The high came in the middle.

At this time, it is unclear if the January 19 reversal is only a correction in an uptrend, or if it is the beginning of something larger. The main cause of the decline is the bottoming of the 9-mo cycle which is ideally due next week. There are many signs that it will make its low on time. The kind of a rally that the SPX will be able to muster afterwards will determine if it is only a test of the high, or a rise to new highs.

There is another cycle which is due around March 1st. The 90-day cycle has been very dominant, bottoming in March, July and November of 2009. The current phase should continue to exert some pressure on the market until late February-early March and should be an impediment to a strong rally immediately after the 9- mo has made its low. But afterwards, the two cycles combined should be able to extend the "hope rally", as it is called by some, into about May. After that date, the 4-year cycle should take over and send the market into a more prolonged decline into the Fall.

This is the basic scenario as I see it, and we cannot know, at this time, if mid-January will turn out to be the high of the "hope rally", or if it will come in May or June.

Our immediate focus is on determining the extent of the current downtrend. It is possible that the bottom will not be made until the 90-day cycle has made its low.

What's ahead?

Chart Pattern and Momentum

The Daily Chart of the SPX clearly shows the deceleration which was taking place in the last few weeks of the uptrend. Prices kept rising with less and less upside momentum until a little past the half-way point of the 90-day cycle, and kept hugging the bottom trend line of an uptrend (black trend lines) which started after the July correction, unable to pull away from it decisively. These last few weeks were very frustrating to the bears who kept expecting a decline at anytime. Now that the decline has started, they may be further frustrated by the shortness of its duration.

By closing below 1085, the index has given a projection to 1050-1058. This is marked on the chart by the two lower pink lines, and there is at least a chance that it might not make it even to that level before it bounces. The two bottom indicators started to flatten out 5 trading days ago, and the A/D indicator is now showing some positive divergence. In this position, it does not take much to turn them up and give a buy signal. However, because of the 90-day cycle bottoming at the end of February, we could have a bounce followed by another decline into the target later.

Considering the position of most indicators, the market should make a low in the next 2 or 3 days.

The green channel lines represent the trend from last March. This decline will not become an intermediate downtrend until it has broken out of that channel and started to trade below the last short-term low of 1029.38.

We will now move to the Hourly Chart to evaluate when the 9-mo cycle might make its low.

I like to draw channels by connecting the appropriate lows and then drawing a parallel from the top. This technique seems to give a good representation of the trend the majority of the time. In this case, the decline which started when the index broke below its trend line from July, is framed by the two heavy black lines which form a down-channel. The index should continue to trade within the confine of these lines until the trend has reversed. The first indication of a reversal will come when the red trend line is penetrated on the upside. It will become confirmed when prices move out of the channel and above the last price cluster (about 1103).

There is already plenty of positive divergence in the indicators, which normally means that the reversal is imminent. The nearest projection of 1069 could indicate an interim low within the downtrend, unless enough strength develops to move through the trend and channel lines, in which case it would become the low of the decline. The main projection, however, is between 1050-58, and the small cycle bottoming on 2/3 in conjunction with a CIT occurring on the same date could mark the low of the 9-mo cycle.


The 9-mo cycle is mainly responsible for the current decline. Ideally, it should bottom in the next few days. It will be followed by the 90-day cycle which has been very dominant and is scheduled to make its low towards the end of February.

Longer-term, the 4-year cycle should exert pressure in the second half of the year.


There is an interim projection to 1069.

By breaking below 1085, the SPX has given a projection to 1050-1058.

We should also keep in mind that .382 retracement of the move from July to the top is 1043.


This was the comment made in the last newsletter:

"The NYSE Summation index (courtesy of StockCharts) has now reached overbought on its RSI. The rally in the SPX to its projection target has caused it to become overbought with severe negative divergence -- just what we need for a top. We now need for it to turn down for a sell signal."

This is what the index now looks like. It is now just entering the oversold status and does not look quite ready to turn up -- which means that we might have more declining prices ahead of us before we find a low.

The short-term A/D is beginning to show a pattern of deceleration and divergence to price, which is an indication that an interim low may be just ahead of us.

Market Leaders and Sentiment

Also from the last newsletter: "The long-term sentiment indicator (courtesy of SentimenTrader, above) is now in a position to give us at least a short-term top."

Currently, the indicator is showing the exact opposite of what it did two weeks ago: it is bullish and suggests that a low is imminent.

We should also note that the banking index has hardly participated in the decline.


This was the comment made in the last newsletter:

"The SPX is now ready to have a short-term decline which could be the start of something bigger. To suggest that we have started a move of intermediate nature, we would have to trade below 1030. More topping action may be needed before we are ready to do this."

I think that I will let it go at that.

The following are examples of unsolicited subscriber comments:

Awesome calls on the market lately. Thank you. D M

Your daily updates have taken my trading to the next level. D

… your service has been invaluable! It's like having a good technical analyst helping me in my trading. SH

I appreciate your spot on work more than you know! M

But don't take their word for it! Find out for yourself with a FREE 4-week trial. Send an email to .

By Andre Gratian

A market advisory service should be evaluated on the basis of its forecasting accuracy and cost. At $25.00 per month, this service is probably the best all-around value. Two areas of analysis that are unmatched anywhere else -- cycles (from 2.5-wk to 18-years and longer) and accurate, coordinated Point & Figure and Fibonacci projections -- are combined with other methodologies to bring you weekly reports and frequent daily updates.

“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

Disclaimer - The above comments about the financial markets are based purely on what I consider to be sound technical analysis principles uncompromised by fundamental considerations. They represent my own opinion and are not meant to be construed as trading or investment advice, but are offered as an analytical point of view which might be of interest to those who follow stock market cycles and technical analysis.

Andre Gratian Archive

© 2005-2019 - 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