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
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
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Cycle Turning Points Analysis 12th August 2007

Stock-Markets / Cycles Analysis Aug 12, 2007 - 08:55 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 midpoint, some of its dominant components are topping and could lead to a severe correction in 2008.

SPX: Intermediate Trend - The intermediate trend which started at 1555 on 7/16 should soon come to an end as the 4.5-yr cycle reverses.

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 .

Overview
The past two weeks were extremely volatile for the equity markets and was characterized by large price swings. Beginning last Monday, and after dropping 127 points from its 1555 high of three weeks ago, the SPX had a 3-day, 76-point rally only to give most of it back in the next two days. All other indices behaved similarly.

The fundamental reason behind this chaotic condition was that the extent of the sub-prime mortgage woes suddenly became glaring with a number of funds, domestic and European, reporting sharp losses and shutting down, causing concern that the problem and its repercussions may be far more severe than had originally been realized. This caused central banks to inject massive amounts of funds into the system to alleviate fears of a liquidity crisis.

The technical reason is that we are in the time period when the 4.5-yr cycle is due to make its low. Major cycle lows usually coincide with economic disturbances, and this is no exception.

But there are signs that the worst of the price decline may be over. During this last retracement, while the Dow industrials made a new low, the Russell 2000 and the Banking Sector -- both of which had presaged the coming decline by their relative weakness to other indices -- remained comfortably above their previous lows, thereby displaying short-term relative strength. It's also interesting that two sectors that have been the most directly affected by the housing problem -- the Dow Jones Home
Construction Index and the Dow Jones Equity REIT index -- also performed relatively well.

Another small positive is the fact that crude oil prices have given up a good deal of their recent gains in the past week. I had stated earlier that the Point & Figure chart formation of oil predicted a move to about $75-78. After reaching that level, it has now retraced to 71. It is too soon to determine whether this is only a correction in a longer-term trend which will eventually take oil to new highs, or the beginning of a more severe decline.

It is normal for the stock market to fluctuate between periods of order and chaos. The beginning and end of chaotic (corrective) conditions, small and large, are predictable with cycle analysis. Some of the indicators which gave warning of an approaching correction are now beginning to predict that this period is coming to an end. We should therefore be looking for the equity markets to stabilize and a resumption of the uptrend. The original estimate was that the correction could extend into
September, but some preliminary signals suggest that the low may come sooner.

What’s Ahead?

Momentum:
We turn again to the SPX daily chart (courtesy of StockCharts) to show the progress that the correction is making.

You can see the positive signals which are beginning to appear in the RSI (top of the chart) and Money Flow (bottom) indices. They have lost their downside momentum and have flattened out at the bottom of their range. I have also drawn descending trend lines on these indicators. A resumption of the uptrend will be confirmed when these trend lines are broken to the upside.

I have also drawn two channels on the price chart. The SPX has already tried to move out of the smaller channel, but was pushed back. It is important that, in the current retracement, it does not travel all the way back to the lower trend line before it turns back up. This would be an indication of the deceleration in price which precedes a reversal.

Moving decisively out of the smaller channel and overcoming the recent high will be a positive sign that the uptrend has resumed. The index should then move beyond the confines of the larger channel, which would most certainly confirm the fact that the long-term bull market is still intact and that new highs lie ahead.

A positive sign for the longer term is that the 200-DMA is still moving up. Prices are currently fluctuating around it but should eventually move back above it as the uptrend resumes.

The weekly chart gives us a better perspective of the long term action. It shows that, unless it continues for a while longer and goes deeper, the current correction does not seem to be too much different from the previous intermediate downtrends which have taken place over the past 2+ years. What is remarkable here is that the 4-year cycle which bottomed in July-August 2006 and now the 4.5-yr cycle which is currently bottoming have only produced such shallow price declines. This should be an indication that the bull market has longer to go.

If prices had held at a higher level as they retraced after last week's rally, it would have signaled that the correction was already over. But since the index gave back most of its gain, it is likely that the bottoming process is on-going and will take a bit longer. With last week's price action, the thin blue line of the bottom indicator has become deeply oversold, but has not yet been able to turn up. It will do so when the SPX is ready to resume its uptrend.

Cycles
The long, intermediate and short-term cycles are all playing an important part during this time period.

Longer-term, the 6-year cycle has already topped and the 2 year should do so between now and October. These dominant cycles will not have an immediate effect on the market except to slow down the bull run over the next few months after the 4.5-yr has made its low and takes the indices to new highs, but they should begin to exert downside pressure as we enter 2008.

The 4.5-yr cycle is in the process of making its low. This could take another 1 to 3 weeks of base building action.

The bottoming of the 20-week cycle was probably the cause of last week's substantial rally. I must admit that, because of the strong upside momentum, I initially thought that it might have signaled the low of the larger cycle as well, but the subsequent market action makes this extremely dubious, and it may be at least 2 more weeks before we have strong evidence that it has reversed.

Why 2 weeks? Because the week after next will see a nesting of several short-term cycles which should have some effect on the market. If the 4.5-yr low does occur next week (which it very well may) these short-term cycles will only provide a retracement after the initial lows. Or they may give us the final downward thrust of the larger cycle.

Projections
The 1440 projection given on July 29th did provide a good, temporary rebound for the SPX, but it was followed by a deeper decline to the next projection level of 1426-28 (given to subscribers) which saw an even larger bounce. Since it now looks probable that we will make new lows next week, what would be a reasonable target?

Unless the Point and Figure pattern which was made on Friday changes dramatically on Monday, the next downward projection appears to be between 1410 and 1420. This is supported by Fibonacci ratio targets as well, so it would be the area to look for another reversal and potential low for the larger cycle.

Breadth
There are two aspects of the A/D ratio to which I pay close attention. The hourly figures and the MACD of daily closes, which is a very close simile of the McClellan oscillator.

I find it significant that the low of the hourly figures came on 7/26 when it reached almost -3000, and that this figure has not even been approximated since that date. Subsequent selling waves only brought the ratio down to -2000 on three separate occasions, including last Friday. I believe that this is a sign that we are very close to the cyclic low. This possible bullish implication is also strongly reflected in the performance of the daily oscillator.

Market Leaders & Sentiment
I have acknowledged NDX and GE as leading indicators. There was no divergence between these and the SPX at the 1555 top, which probably implies that the bull market is still in force. But the RUT and BKX showed plenty of negative readings. Now these two appear to be stabilizing nicely even though the DOW and SPX are still weak. The performance of the Russell was particularly impressive on Friday.

The ISEE Put/Call indicator is also at a level which is normally associated with important lows. Note that it is currently even more bullish today than it was at the March low.

Summary
The intermediate decline which began at 1555 on the SPX and which is caused by the bottoming of the 4.5-year cycle may be just about over. Preliminary positive signs are appearing in momentum, breadth, and sentiment indicators. Also, the recent performance of some leading indexes which pointed to the top are now signaling the opposite.

The 4.5-yr or 54-mo cycle which last bottomed in March 2003 is now in its 53rd month and is on schedule to make its low.

Because of the short-term cyclic configuration, the bottoming process may be extended for another two weeks.

The following are examples of unsolicited subscriber comments:

What is most impressive about your service is that you provide constant communication with your subscribers. I would highly recommend your service to traders. D.A.

Andre, You did it again! Like reading the book before watching the movie! B.F.

i would like to thank you so much for all your updates / newsletters. as i am mostly a short-term trader, your work has been so helpful to me as i know exactly when to get in and out of positions. i am so glad i decided to subscribe to turning points. that was one of the best things i did ! please rest assured i shall continue being with turning points for a long while to come. thanks once again ! D.P.

Andre, I must say that your service is fantastic, since I have signed up for your 30 day free trial I have made two successful trades. When my 30 day free trial is up please let me know so I can sign up as a regular member. I have tried a lot of services out there and I must say yours tops everything. Please use this testimonial if you like. S.W.

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

By Andre Gratian
MarketTurningPoints.com

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 strategy.www.marketurningpoints.com

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 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