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
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
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

Market Oracle FREE Newsletter

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

Stocks Bull Market Rolls Along, Long-term Elliott Wave Analysis

Stock-Markets / Stocks Bull Market Oct 16, 2010 - 05:10 AM GMT

By: Tony_Caldaro


Best Financial Markets Analysis ArticleAfter a quiet beginning the market again moved to new uptrend highs this week. Economic reports were mostly positive with only four indicators worsening or weak, and thirteen steady or improving. On the negative side; weekly jobless claims increased as did the trade deficit, consumer sentiment and the monetary base declined. On the plus side; weekly mortgage applications increased along with retail sales, the NY FED, the WLEI and the M1 multiplier. Holding steady or improving; export/import prices, the CPI/PPI and business inventories. The budget deficit was also less negative. For the week the SPX/DOW were +0.75%, and the NDX/NAZ were +3.15%. Asian markets gained 2.2%, European markets were +1.7%, and the Commodity equity group was +1.0%. Bonds were -0.9%, Crude lost 1.5%, Gold gained 1.6%, and the USD lost 0.2%. Housing, industrial production and the FED’s beige book highlight the upcoming week.

LONG TERM: bull market

This week we review a chart we examined several months ago, while the market was in the Apr10 to July10 correction. We posted the chart below. You can also go to the link below under CHARTS and it’s the third chart down on the first page. This chart displays the weekly activity of the SPX from Oct02 to present. Before we discuss the wave structure there are several technical observations that should be noted.

First, at the bottom of the chart we display the weekly MACD. Notice during the Oct02-Oct07 bull market this indicator stayed above the neutral, the ”0″ line, for the entire bull market. Then when the market started to breakdown in early 2008 and enter a bear market, the neutral level was breached and this indicator stayed negative for all of that decline. Now observe in mid-2009 the MACD crossed above the neutral again and has remained above it ever since. This is normal bull/bear market action for this indicator.

Second, we like to review the RSI 5 indicator at the top of the chart. Notice during the Oct02-Oct07 bull market this indicator constantly hit an overbought reading – above 70. Then during the Oct07-Mar09 bear market it never hit an overbought reading. Now after the Mar09 low the RSI 5 is again hitting overbought readings. This also is normal bull market activity.

Third, we review the wave structure of the Oct02-Oct07 bull market, the Oct07-Mar09 bear market, and the current bull market. During the first bull market there was a five Major wave advance from the Oct02 low to complete Primary wave V. Also observe that Major waves 1 and 3 were relatively simple waves and Major wave 5 was quite detailed and extended. During the Oct07-Mar09 bear market the selloff was quite swift and the wave structure was a 5-3-5 zigzag.

Now during this bull market, anticipated to unfold between Mar09 and Feb12, we’re counting it as a five Primary wave structure. Primary wave I subdivided into five Major waves as noted on the chart. This was followed by a Primary wave II correction. Now the market should be in Major wave 1 of Primary wave III. Near the end of September we created a roadmap for the anticipated wave structure for this bull market. This is just a guideline but worth a look: Clearly, from an objective elliott wave view, we see no reason to be bearish on the US equity market.

MEDIUM TERM: uptrend

This uptrend, Major wave 1, that started in early July has been somewhat different from the three previous Major wave uptrends of this bull market. The early part of the uptrend coincided with two separate cycle lows. First the four year Presidential cycle bottom in early July, and then the two year Tech product cycle bottom in late August. Since then this uptrend has made steady progress higher. In fact, four of the nine SPX sectors have already made new bull market highs: XLB (basic materials), XLK (technology), XLP (consumer staples) and XLU (utilites). In addition, the NDX and the NYAD (market breadth) posted new bull market highs this week as well. In the foreign markets five of the thirteen indices we track also made new bull market highs: BSE (India), BVSP (Brazil), DAX (Germany), HSI (Hong Kong) and the TSE (Canada). Plus the Dow Jones World index also made a new bull market high. These foreign markets are confirming the bullish market activity in the US.

Since this uptrend is a Major wave it should subdivide into five Intermediate waves. Intermediate wave one concluded at SPX 1129 in early August. Intermediate wave two ended in late August at SPX 1040. Intermediate wave three is currently underway. The three rising Intermediate waves, during this uptrend, should subdivide into five Minor waves. We observed this wave structure during Intermediate wave one, and we are now observing it again in Intermediate wave three. Minor wave 1 ended at SPX 1149 in mid-September, Minor wave 2 hit SPX 1123 shortly thereafter, and Minor wave 3 may have just ended at the recent SPX 1184 uptrend high. The next few days of market activity should help to confirm that event.

When Intermediate wave three concludes, estimated near the OEW 1222 pivot, Intermediate wave four should provide the biggest pullback since late August. Then we are expecting Intermediate wave five to continue the uptrend into early 2011 and potentially nearing the OEW 1313 pivot. This would make this uptrend similar to the Major wave 3 uptrend in time and in price. These price levels and the time factor are, naturally, just guidelines.


Support for the SPX is at 1176 and then 1168, with resistance at 1187 and then 1222. Short term momentum ended the week coming off of a slightly oversold condition and is now rising past neutral. It is possible that friday’s retest of the SPX 1167 low ended Minor wave 4. This pullback was 17 points (1184-1167) and the short term OEW charts moved to slightly positive during the rest of the trading day on friday. Minor wave 2 pulled back from SPX 1149 to 1123 (26 points) in mid-September - so they are similar.

Overhead resistance is at the 1187 pivot, and then the bull market high pivot at 1222. Support remains at the OEW 1168 pivot and then around the SPX 1150 area, (OEW 1146 pivot). A breakdown below the 1146 pivot would make the current short term count questionable. Also, a breakdown below the 1136 pivot would put the entire uptrend count in jeopardy. On the upside, once the market clears the OEW 1187 pivot there should be little resistance, except for a pause at 1200, up to the OEW 1222 pivot. Best to your trading!


Asian markets were mixed on the week for a net gain of 2.2%. All remain in uptrends. The SSEC (China) soared 8.5%, while the NIKK (Japan) lagged -0.9%.

European markets were all higher on the week (+1.7%) and improving. Four of the five we track are in confirmed uptrends. The DAX (Germany) led +3.2% and the FTSE (England) lagged +0.8%.

The Commodity equity group were all higher for a net gain of 1.0%. All remain in uptrends. The Dow Jones World index is uptrending, made new bull market highs, and gained 1.2% on the week.


Bonds took a breather this week after four consecutive weekly gains: -0.9%. 10YR yields dropped to 2.33% on monday then turned higher to finish the week at 2.58%. There is a positive divergence on the weekly yield chart indicating a potential new uptrend in yields may be unfolding. The current downtrend has lasted an unusually long six months.

Crude continues to uptrend but lost 1.5% on the week - all of it on friday.

Gold hit another all time high this week at $1,387 and Silver nearly hit $25. While they and Platinum remain in uptrends, there is a noticeable negative divergence of all three daily charts. After such a big rally a pullback from current levels would not be surprising.

The USD continued its decline this week losing 0.2%. It has declined for five straight weeks. The USD, however, is displaying a positive divergence of its daily charts. After a four month downtrend it’s due for a bounce, or even a new uptrend. Technically, we could see USD strength, Bond weakness, and Gold weakness in this upcoming week.


Monday kicks off the economic week with the Industrial production report at 9:15, and at 10:00 the NAHB housing price index. On tuesday we have Housing starts/Building permits. Then on wednesday, the weekly Mortgage applications and the FED’s Beige book. Thursday ends the economic week with BEA leading indicators, the Philly FED and the weekly Jobless claims. As for the FED. We have two speeches scheduled for tuesday. The first by FED chairman Bernanke in Fairfax, VA. at the market close, and the second by FED governor Duke at NYU in NYC in the evening. Best to you and yours this weekend and upcoming week.

By Tony Caldaro

After about 40 years of investing in the markets one learns that the markets are constantly changing, not only in price, but in what drives the markets. In the 1960s, the Nifty Fifty were the leaders of the stock market. In the 1970s, stock selection using Technical Analysis was important, as the market stayed with a trading range for the entire decade. In the 1980s, the market finally broke out of it doldrums, as the DOW broke through 1100 in 1982, and launched the greatest bull market on record. 

Sharing is an important aspect of a life. Over 100 people have joined our group, from all walks of life, covering twenty three countries across the globe. It's been the most fun I have ever had in the market. Sharing uncommon knowledge, with investors. In hope of aiding them in finding their financial independence.

Copyright © 2010 Tony Caldaro - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 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