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
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 Markets Consolidating Towards a Cycle Bottom by Christmas

Stock-Markets / Cycles Analysis Dec 17, 2007 - 09:48 AM GMT

By: Andre_Gratian

Stock-Markets

Best Financial Markets Analysis ArticleCurrent Position of the Market
SPX: Long-term trend - The 12-yr cycle is nearing its mid-point and some of its dominant components may already be restraining the bullish effect of the 4.5-yr cycle. 2008 should see a period of correction into the late summer or Fall, followed by an eventual bull market top in 2009-10.

SPX: Intermediate trend - an extended intermediate-term consolidation is in process.


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

After completing a move from 1406 to 1523, the SPX is now retracing a good portion of its uptrend, closing last week at 1467.95. The large swing reversals since July have managed to confuse both bulls and bears as the market cannot seem to make up its mind in which direction to go.

The bulls see the SPX in an extended corrective pattern which started in early July and which is very close to concluding. The bears feast on the plethora of bad news which keep appearing in the financial media and see the market's inability to extend its uptrends as a bearish sign. Who will be right?

We should soon know, because the most propitious time for the market to conclude its corrective pattern -- if this is what it is doing -- will be about Christmas. After that, the market must prove itself by beginning a strong rally which will carry it to new highs. If it does not, it will probably mean that it needs an even longer correction into next year along with lower levels.

According to the faithful Decennial pattern which has a record of over 100 years, the 7th year (which we are just ending) is the ideal year during which a bull market makes a correction before it goes on to expire in the 9th or 10th year. It is true that the low occasionally comes in the 6th or 8th year, and perhaps it will be the case again this year, but since the cycles and pattern appear to favor 2007 this time, let's give it at least a chance to prove itself.

What's ahead?

Momentum:

On the following chart of the daily SPX, you can see that there was a lot of positive divergence appearing on the oscillators at the bottom of the chart when the index made its low. No such protracted divergence exists at the recent top, as compared to the extended period of divergence that occurred at the last top in October, so there was no warning for the reversal of the past week in the daily indicators, except that they were overbought. The warning was more obvious in the hourly A/D and there was a combined Point and Figure and Fibonacci target to 1523 which was hit precisely before the reversal.

Weakness is still showing in the oscillators, especially in the A/D at the bottom, and that means that we have not yet reached the low of the correction. It will probably be determined by the 20-wk cycle which is due to make its low around Christmas time. There is also a fairly clear Fibonacci target zone which will be discussed later.

On the weekly chart of the SPX which follows, you can see that within the context of the longterm trend which started in 2002-2003 as a result of the 12-yr and 18-yr cycles bottoming about 6 months apart, the current pattern could very well be just a needed consolidation of an overbought market. It was easy to assume that after the 4.5-yr cycle made its low in August the uptrend would resume, especially after it was reinforced by the bottoming of the 9-mo and 12-mo cycles in November, but the rash of negative fundamentals about the sub-prime problem which bombarded the news prevented the uptrend from extending itself right away. Cycles and economic fundamentals both exert an influence on the stock market , and if it had not been for the 4.5-yr bottoming when it did and providing some upward pressure, we could have seen a very steep decline.

One thing to note on this chart is that the bottom indicators never did confirm the resumption of the uptrend and are still trending down. If they fail to develop some upward momentum and break-out of their down channels as the index rallies at year-end, the odds favor that the correction will continue ... perhaps all the way to March-April which is the next low of the Hurst 18-mo cycle.

Cycles

The cycles that have affected the market are clearly marked on the above charts. The asterisks on the weekly chart represent the lows of the 20-wk cycle going back to the beginning of the bull market. This is the cycle which is currently controlling prices and which will be responsible for bringing about a reversal to the upside after it has made its low. The best time estimate for this is just before or just after Christmas, but it does not always bottom exactly every 20 weeks. In March, for instance, it turned out to be only 19 weeks long.

I am also expecting a 6-wk cycle low just about the same time, so the two combined could create a mini-climax into the projection area.

Projections:

There are two Fibonacci projections for the current decline: The short-term one is to about 1460. If that level is broken, it is conceivable that prices could move back down to about 1440 or slightly lower.

The current Point & Figure chart pattern does not lend itself to any clear projection.

Breadth

Longer-term breadth, as reflected in the McClellan summation index has not been good for some time and has basically been in a down-trend since March or April. With the low of the 4.5-yr cycle, it attempted to get back in an uptrend and had a rood rally, but lost all that momentum in the subsequent decline and was not able to regain it in the rally from 1407 to 1523. This could become a concern for the weeks ahead if it does not stabilize soon and resume its uptrend. Breadth must support price.

The MACD of the A/D which I use as a short-term breadth indicator and which is pictured on the daily chart above, gave a clear forewarning that a good rally was coming at 1407, but it is not giving such an indication right now and is making a weaker pattern than the momentum oscillator.

Market Leaders and Sentiment

Things are a little mixed, here. GE which reported disappointing earnings sold off while the market was rallying and has remained at the bottom of its long-term channel.

The NDX is still stronger than the SPX on an intermediate-term basis, but has been roughly in synch with it in the past few weeks.

The short-term pattern of the ISEE put/call ratio is neutral, insider buying continues to be predominantly bullish.

Summary

The stock market has undergone an extended consolidation since July. The preferred corrective pattern suggests that it is in the final stages of completion which will probably coincide with the bottoming of the 20-wk cycle about Christmas time.

The market will then have a chance to prove that the correction is really over or if it will need to continue into 2008.

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.

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