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
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 Important Top Within Next Two Weeks

Stock-Markets / Stock Markets 2013 Oct 28, 2013 - 05:36 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 is back in a short-term uptrend but within days of a top.

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 indices are in the final stages of a move which started at SPX 1046. Will this be the final top of the bull market? Or will there be one more short-term correction followed by the final run-up to the top of the long-term uptrend which started in March 2009? It all depends on how one reads the current structure and entirely depends on what the market decides to do! smile

In any case, a short-term top is due in a matter of days. This is evidenced by the structure which shows that we probably started the 5th wave of the move from 1646 (although it could still be part of wave 4) and by the projection for this move which is now just a few points higher. This is also supported by the condition of the daily and hourly oscillators which are displaying topping patterns and negative divergence.

From a timing standpoint, the short-term top could coincide with the FOMC statement which is next Wednesday. But the fact is that the current short-term uptrend from 1646 has exceeded the high of the previous one by a sizable margin and thereby nullified the formation of an ending diagonal triangle, shifting the odds of having to endure one more correction before the final high is made. This is Tony Caldaro's analysis of the current EW structure and, since he has correctly analyzed the market since its 2009 low, I would not want to bet against him.

Chart Analysis

I don't think that I can improve on the manner in which I depicted the market's position last week. So I will simply update the same charts, starting with the Weekly NDX.

Last week saw a new high which slightly surpassed my first projection. The weekly bar exceeded it, but not by much, showing that the projected level may be attracting some sellers. But to be on the safe side, and especially if there is a short-term correction followed by a final surge, I believe that on the next move NDX can reach the new target of 3435 before peaking -- as determined by a Fibonacci projection. That would put QQQ around 84.00/84.50, which is its P&F projection.

Last week, the DJIA made some progress, but not enough to reach a new high and stopping short of it by 140 points.

The Weekly Dow Industrials has a chart which is more interesting in that it is diverging from the NDX by such a wide margin. To begin with, the entire bull market phase confined its two early uptrends to the top of that major (green) channel. After a significant correction into October 2012, it started another intermediate (grey) channel which refused to go all the way to the top of the primary channel. This deceleration process started in May of this year, which was also the last time that DJIA touched the top of that secondary channel. For the past five months it could only trade in a broad lateral range while the other indices were making new highs. The loss of momentum is best seen in the two oscillators which were in a steady decline during this same time period.

The question of whether or not the DOW will make a new high will be important to the Dow Theorists. The DOW transportation index has surged to a new high in the past 3 weeks, and if the DOW itself makes a new high, they will argue that we are still in a bull market - and they will be right, technically! But that will not prevent the market from having a severe correction reminiscent of 2008. If Tony Caldaro is correct in his EW labeling, the top being formed (Primary III) will correspond to the top made in 2000 which brought about a decline lasting three years and 785 DOW points.

Because of the current cyclical configuration, this bear market should be much shorter, only lasting about a year, but it could be nearly as violent. A quick estimate gives us a potential decline of about 600 points on the SPX (to be refined later). So, you will have to decide for yourself if this qualifies as a bear market. Whether it does or not, I don't think you will want to stay long, even if you are a "long-term" investor.

The SPX hourly chart (below) is where the warnings that we are coming into a short-term top are very clear: most likely in the next few days.

First of all, I have labeled the structure as a five-wave pattern with the fifth wave currently under way (unless it turns out to be still part of wave 4). All the waves fit within a steep channel which, when broken, could signal the beginning of the correction.

Another sign that the decline has started will be when the blue 21-hr MA is penetrated decisively. It has done a remarkable job of containing waves 2 and 4, keeping them in shallow corrections. A more reliable sign will be when the 50-hr MA (light blue) has been breached.

Now let's look at the oscillators. In spite of the relatively shallow uptrend of wave 5, the SRSI is already overbought and in its terminal stages. As for the price of the MACD and the A/D index, they are flat-lining and showing severe divergence. Considering that the projection for this move is just a few points away, it looks as if we could be there in time for the Fed meeting on Wednesday.

If we are to have a final correction followed by a final wave up, it may occur quickly if the cycles have anything to do with the final formation.

The three charts shown above are courtesy of QCharts


An important cycle high is due in early to mid-November. Will that give the market enough time for a correction followed by the final surge?

I will leave the next sentence as it was written last week: "We also should start to look for solid evidence that the longer-term cycles are taking charge of the trend. Is the DOW the first to succumb to these longer-term pressures?"


The McClellan Oscillator and Summation Index appear below (courtesy of

The McClellan Oscillator has hardly moved in the past week, looking very similar to my own daily A/D oscillator. Whether it makes a new high or not in the next few days is immaterial since its fate is already pretty much determined by the lack of strength in the hourly index.

Because NYMO remained positive, NYSI has continued to advance. But it's hardly a show of strength, and we'll have to see how the next market correction affects it.

NYSE McClellan Oscillator Daily Chart

NYSE Summation Index Chart

Sentiment Indicators

The SentimenTrader (courtesy of same) long-term indicator score remains at 60 for the third consecutive week. I would prefer to see it at 70 as a clearer indication of a market top.

Sentiment Weekly Chart


VIX has returned to its base line and seems to be holding on to its positive divergence, but there has been very little volatility at the low and this has created only a minor base formation on the P&F chart. We'll have to see if this turns out to be a problem in determining the market top and the range of the next move in VIX.

XLF (Financial Index)

XLF is behaving the way it should at a market top by losing strength relative to the SPX. That contrast just needs to become a little more pronounced in the days ahead.


TLT has continued to bounce from its previous low. It has almost reached the broken support level which should provide resistance to the uptrend. In addition, it is approaching the mid-range of the channel which delineates its long-term downtrend. This combination could stop its advance, and it is reinforced by the small base which only carries a low P&F count. That could shortly turn TLT back down. Let's give it a week or two to determine what it wants to do.

GLD (ETF for gold)

As mentioned last week, GLD is looking a little more bullish short-term, but since this move is part of an upward correction in a long-term downtrend, it should be limited in price and scope. After it has concluded in the next couple of weeks, the index will be susceptible to continue its downward trek, perhaps to the 110 level which has been mentioned several time as a likely objective.

UUP(dollar ETF)

UUP looks as it may be coming to the end of its downward journey. It has reached the low of its large corrective channel and is staying away from the bottom line of the shorter, steeper channel. Also, faint signs of deceleration and positive divergence are beginning to show in the MACD. This should become more evident in the price chart over the next couple of weeks.

USO (United States Oil Fund)

Last week, USO broke its uptrend line and quickly plunged to the support level provided by the top of a previous congestion pattern. Whether it rebounds immediately or spends some time making a base, it does not look ready to start a significant recovery. This short-term downtrend was predictable after USO struggled to reach the top of its shallow bullish channel. Its next challenge will be to remain above the current support level and to refrain from dropping all the way down to the bottom of that channel.


That we are coming to a significant top, is clear. What is murky is whether this top is formed over the next 2 or 3 days, or over the next couple of weeks. The latter seems more probable.



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

6 Critical Money Making Rules