Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Correction Still Underway, Next Uptrend Bull Market Top?

Stock-Markets / Stock Markets 2013 Oct 07, 2013 - 03:02 PM GMT

By: Andre_Gratian


Current Position of the Market

SPX: Very Long-term trend - The very-long-term cycles are in their down phases, and if they make their lows when expected (after this bull market is over), there will be another steep decline into late 2014. However, the severe correction of 2007-2009 may have curtailed the full downward pressure potential of the 40-yr and 120-yr cycles.

Intermediate trend - SPX made an intermediate high at 1730 and is now in a corrective mode.

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 discusses 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


Market Overview

The correction which started at SPX 1730 is still underway, but it probably reached the approximate mid-point of its correction on Thursday with the low of the 8-wk cycle. This would be the A wave of the corrective pattern with B now in an uptrend. The up-leg of the correction (B) has already retraced nearly .382 of the distance from the top. If it were to retrace 50%, this would take it to about 1700 and .618, to 1797. One should watch the market action closely to see at which level it stops rallying and starts on the C wave.

The dichotomy between the various indices continues with the Dow Jones Industrial still being the weakest of the lot. The Russell 2000 and NASDAQ 100 are clearly the strongest, but the latter appears to be in a final blow-off stage. SPX is somewhere in the middle, being restrained by weakness in the Dow and the slowing momentum of the financial index which failed to make a new high in September.

The patterns that are being made by the SPX and the NASDAQ 100 are strongly suggestive of a bull market top. That would fit in with the long-term cycles which are due to make their lows about a year from now. The market structure also suggests that an important pattern is being completed. We should know in a few weeks if this bull market, which has lasted four and a half years, is about to give up the ghost.

Chart Analysis

The buying climax which appears on the NDX 100 chart is best seen on the weekly chart. It is not nearly as severe as the one which occurred going into the March 2000 top, but it does have some of the same characteristics: a move which starts accelerating upward after a long uptrend. The NASDAQ 100 bull market started almost five years ago and the price started accelerating after the October 2012 low. Based on a Fibonacci projection, I have marked where I believe the index will make its final high.

Note that in spite of the strong price uptrend, the MACD has not been able to rise above the high of May 2011. When the index finally makes its high, this oscillator should collapse and go negative in a matter of weeks, if not days.

While the terminal pattern of the NASDAQ 100 shows up best on a weekly chart, the SPX pattern -- which is the exact opposite - can best be seen on a daily chart. (I discussed this in the last newsletter.) SPX, which is now in wave 4, is probably making an ending triangle and has a little longer to go. Then wave 5 should make a new high -- perhaps penetrating the top trend line before completing. This should be followed by a reversal which will mark the start of the next bear market.

I went through extensive analysis of this chart, last week, so I won't repeat it except to say that also, in the case of the SPX, the MACD gives us the best indication that we are making a major top. Since May, while the index was making higher and higher highs, the MACD made lower and lower tops. It is likely that the same pattern will occur in the final wave.

As for the short-term trend, we can best see what is taking place on the hourly chart.

Shaped primarily by the short-term cycles, SPX is most likely making a corrective pattern in the form of an A-B-C with a good possibility that wave A was completed on Thursday at the low of the 8-wk cycle, and B will be formed by the rising phase of that cycle. But it should be short-lived because the 18-wk cycle -- due after the middle of the month -- should soon overwhelm it as it exerts downward pressure into its low creating wave C.

The low point of A is best seen in the MACD which showed some positive divergence at the final downtick. By Friday's close, SPX had already retraced .382 of its decline from 1730, and this could satisfy the minimum requirement for wave B. But since none of the oscillators appear ready to give a sell signal, it is more likely that we'll reach about 1700 (a .50 retracement) before putting an end to it. Two of the three hourly oscillators are overbought and may need to pull back a little before the final push takes place.


Last week, the 8-wk cycle (which consists of two 4-wk cycles) made its low and started a bounce (which will probably turn out to be limited in scope) followed by another low caused by the 18-wk cycle as it bottoms after the middle of the month.


The McClellan Oscillator and Summation Index appear below (courtesy of

The McClellan Oscillator has now entirely corrected its overbought condition and dropped slightly into negative territory. If my analysis is correct, it should now rally into the B wave and then drop even lower to complete the C wave.

NYSI has begun to roll over, but should attempt to rally a little as NYMO rallies. NYSI is still making a weak pattern which is not likely to become much stronger if we are in the final throes of the bull market.

NYSE McClellan Oscillator Daily Chart

NYSE Summation Index Daily Chart

Sentiment Indicators

The SentimenTrader (courtesy of same) long-term indicator score has ticked back up to 60 in spite of the market correction. This has no immediate significance.

Sentiment Weekly Chart


Last week, VIX made another short-term high, rising approximately 1 point higher than the previous one. While it may correct slightly as SPX finishes its B wave correction, it is likely that it will continue to move up -- perhaps toward the top of the long-term trend line - by the time the C wave is completed.

It is also very likely that it will remain above its recent lows when the SPX makes its final high, thereby holding on to the divergence which has characterized its action since the March low. This protracted relative strength in the VIX is another indication that the market is coming to the end of its bull run. At the very least it suggests that an important top is being formed.

XLF (Financial Index)

XLF is losing relative strength to the SPX. It has failed to make a new high in conjunction with SPX and has already broken its comparative trend line while SPX is still trading above. The financial index is in the habit of underperforming SPX at important tops.


TLT Has made a temporary bottom but there is nothing in its long-term indicators that suggests that it is ready for anything more than a consolidation in a downtrend which may see a rally to the broken support line before resuming its decline.

GLD (ETF for gold)

GLD had its first significant rally within its long-term downtrend and may be preparing to extend it by a few more points. The first rally was stopped by minor overhead resistance. If SPX resumes its short-term uptrend and is able to overcome it, it will run into something even more significant in the 144-148 area. It is unlikely that it could make any headway beyond that level before more serious accumulation takes place above its previous low. A clean break out of the red channel will be required before we can entertain the possibility that GLD has finally put an end to its long-term correction.

UUP (dollar ETF)

UUP may be reaching the low point of its downtrend from 22.90. Some deceleration is becoming evident on the MACD, and even some positive divergence with the June low is beginning to appear in that indicator. UUP is also near the bottom of its large corrective channel from which it could attempt another rally to the top over a period of several weeks. UUP should start to rally when, or slightly before, the Fed begins to taper its bond purchase program.

USO (United States Oil Fund)

USO corrected its short-term uptrend to the level of its trend line, which corresponds to the former near-term lows. It should attempt to resume its uptrend after the SPX finishes its correction; perhaps reaching the top of its green channel where it is likely to find more resistance.


SPX is approximately half-way through an intermediate correction which could last past the middle of the month, after which it should reach the final top of the bull market which started in March 2009. There are a number of market patterns, divergences, and sentiment indications which strongly suggest that the four and a half-year bull market is ready to transition into a bear phase.

Of course, if there is no resolution to the Washington crisis before October 17, there is a good possibility that the bull market top is already in place.



If precision in market timing for all time framesis something that you find important, you should

Consider taking a trial subscription to my service.  It is free, and you will have four weeks to evaluate its worth.  It embodies many years of research with the eventual goal of understanding as perfectly as possible how the market functions.  I believe that I have achieved this goal. 


For a FREE 4-week trial, Send an email to:


For further subscription options, payment plans, and for important general information, I encourage

you to visit my website at It contains summaries of my background, my

investment and trading strategies, and my unique method of intra-day communication with

subscribers. I have also started an archive of former newsletters so that you can not only evaluate past performance, but also be aware of the increasing accuracy of forecasts.

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