Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Stock Market Potential Diagonal Triangle Pattern Forming

Stock-Markets / Stock Markets 2014 Apr 12, 2014 - 02:24 PM GMT

By: Tony_Caldaro

Stock-Markets

A volatile and somewhat disappointing week for the bulls. The week started off with a gap down on Monday, followed by a tradable low at SPX 1837 on Tuesday. Then after a rally to SPX 1873 at Thursday’s open, the market sold off rapidly into Friday. For the week the SPX/DOW were -2.50%, the NDX/NAZ were -2.85%, and the DJ World index was -2.0%. Economic reports for the week, oddly enough, were all to the upside. On the uptick: consumer credit, wholesale inventories, export/import prices, the PPI, consumer sentiment, the WLEI, the M1-multiplier, plus the budget deficit and weekly jobless claims both improved. Next week we get reports on the FED’s beige book, Industrial production, the NY/Philly FED and Housing.


LONG TERM: bull market

This week’s market activity put a dent in our more bullish realignment scenario as the SPX/DOW/NDX/NAZ all confirmed downtrends. The realignment would have occurred if the SPX/DOW remained in uptrends, while the NDX/NAZ ended its downtrend. As a result of this week’s activity we have shifted the SPX count to match the DOW count, while our NDX/NAZ count remains unchanged. More on this later.

We continue to count this bull market as Cycle wave [1]. Primary waves I and II completed in 2011, and Primary wave III has been underway since then. While only one of Primary I’s five Major waves subdivided, all three rising Major waves of Primary III are subdividing. We have labeled Major waves 1 and 2 completing in mid-2012, and Major waves 3 and 4 completing in mid-2013. Major wave 5 has been underway since that low.

When Major wave 5 does conclude, it will end Primary III. Then we should see the largest correction since 2012 for Primary IV. After that Primary V should carry the market to new all time highs. Currently our bull market target is SPX 1970-2070 by Q3 2014.

MEDIUM TERM: downtrend

After an uptrend high in January, which we labeled Int. wave one, and a downtrend low in February. We expected the recent uptrend to be Int. wave three. This week, however, a new downtrend was confirmed ending what appears to be a three wave February to April uptrend. This uptrend aborted quite a bit below expectations, and it can not possibly be a wave three, as it has already overlapped the high of the previous uptrend. As a result of this market activity we have aligned the SPX count with the DOW count.

We have been counting the DOW as a potential Major wave 5 diagonal triangle. This pattern is considered a rising wedge a-b-c-d-e pattern that unfolds in higher highs and higher lows. But all uptrends are overlapped by the next downtrend. Under this scenario the NDX/NAZ can continue to complete their Primary III normally, while the SPX/DOW make marginal new highs in their Primary III. Then they will likely all realign again for Primary wave IV.

When reviewing the SPX chart under this scenario we observed Int. wave A topped in January, then had a 50% retracement for Int. wave B. With the recent uptrend, Int. C, topping in April another 50% retracement would find support around SPX 1814. If the retracement extends to 61.8%, which is acceptable in this pattern, the SPX should find support around 1800. If this level does not hold, and the downtrend creates more of a channel than a rising wedge. Then our alternate count, in green on the daily chart, would suggest a retest of SPX 1738. We are likely to find out which count is in play this week. Medium term support is at the SPX 1779 and 1699 pivots, with resistance at the 1828 and 1841 pivots.

SHORT TERM

Short term support is at SPX 1814, SPX 1800, with resistance at the 1828 and 1841 pivots. Short term momentum ended the week oversold, with a positive divergence. The short term OEW charts remain negative from SPX 1860, with the reversal level now 1846.

The February to April uptrend appears to have ended with three Minor waves: 1884-1842-1897. The downtrend from that high also appears to be unfolding in three Minor waves: 1837-1873-1814 thus far. When we reviewed the January to February downtrend we observed it had also declined in Minor three waves: 1770-1799-1738. This is typical wave activity in a diagonal triangle.

The a-b-c January to February downtrend unfolded as a 5-3-5 zigzag. Minor A was five waves down, Minor B a strong rally, then Minor C five waves down, in total: 80-30-60 points. This downtrend, from the April high, has already completed five waves down for Minor A, Minor B was a strong rally, Minor C appears in the process of doing five waves down, in total 60-35-60 points so far. Notice these two downtrends are thus far quite similar. If this Minor wave C ends with a small diagonal triangle it could bottom around SPX 1814. If it divides into five clean waves then SPX 1800 could provide support. Thus far we can count four waves down from the SPX 1873 Minor B wave high: 1820-1835-1814-1823. A diagonal triangle Minor C could be forming. If the market continues to fall to the 1779 pivot, then a retest of SPX 1738 is likely. Best to your trading!

FOREIGN MARKETS

The Asian markets were quite mixed ending -0.1%.

The European markets were all lower losing 3.7%.

The Commodity equity group was mixed for a loss of 0.6%.

The DJ World index is still uptrending but lost 2.0%.

COMMODITIES

Bonds are getting close to confirming an uptrend and gained 0.9% on the week.

Crude is still uptrending and gained 2.7% on the week.

Gold is trying to establish and uptrend and gained 1.3% on the week.

The USD appears to be downtrending again losing 1.2% on the week.

NEXT WEEK

Monday: Retails sales at 8:30, then Business inventories at 10am. Tuesday: the CPI, NY FED and NAHB housing index. Wednesday: Housing starts, Building permits, Industrial production and the FED’s Beige book. Thursday: weekly Jobless claims and the Philly FED. The FED has several speeches scheduled this week. Sunday: FED governor Stein at 1:30. Tuesday: FED chair Yellen at 8:45. Wednesday: FED governor Stein at 8:15, and FED chair Yellen at 12:45. Best to your weekend and week!

CHARTS: http://stockcharts.com/public/1269446/tenpp

http://caldaroew.spaces.live.com

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 © 2014 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.

Tony Caldaro Archive

© 2005-2018 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