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
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

Is The Stocks Bull Market Over?

Stock-Markets / Stock Markets 2014 Jul 19, 2014 - 01:22 PM GMT

By: Austin_Galt

Stock-Markets

Well, what a hammering the markets took on Thursday! There’s always a reason for this move or that and the Malaysian Airlines crash near the border of Ukraine and Russia and its potential consequences was the main driver in this case. However, we are right smack bang in the time zone for a top so it’s no surprise to see the markets start to head down. But the question remains, is the 5 year bull market in stocks now done? Well, it is way too early to confirm that. Perhaps a better question would be, is the current cycle top in?


After yesterday’s spanking I began to think so. However, as the rally progressed today I began to have my doubts. I started to second guess myself. And that is exactly the mind frame the market aims to put us in. And I’m certainly not immune to its deception, its treachery. And being aware of this helped me to realise that, as it stands currently, the market is actually doing pretty much as expected so no need to fix something if it ain’t broke!

But let’s reassess things anyway, just to provide some piece of mind and regain any lost confidence. Before we get to the indexes, let’s first take a look at the VIX daily chart.

VIX DAILY CHART


Wow! Look at that massive up move on Thursday. It finished the day up 34%. Surely one for record books in terms of percentage gain.  Probably no better example of the effect the Malaysia Airlines crash had on the markets, apart from I suppose the actual share price of Malaysia Airlines.

Note how the day after I put out my previous VIX report, price came back to test and hold the higher trend line before exploding higher the next day. The low on Wednesday was 10.59 which was just above the weekly PSAR support of 10.43 which I outlined in that report. Nice. And the close above the previous swing highs, denoted by the horizontal lines, and the fact that there is now an established pattern of higher highs and higher lows, means things look solid indeed for higher prices going forward. Some consolidation today is healthy for that expected up move. And the Relative Strength Indicator (RSI) shows that strength is building.

But does this positive action in the VIX mean the tops are in on the indexes. In a word, no. But it does suggest that if the tops are not already in then surely they can’t be far off. Let’s take a look at the Dow Jones Industrial Index first and then the Footsie to see what has transpired since my last update a couple of days ago.

DOW DAILY CHART

The current all time top at 17151 fell on the 17th July, one day after the most recent Bradley Model turn date. Nice. And looking at the RSI and Stochastic Indicator, this high was accompanied by a third bearish divergence. Even nicer.

So, on Thursday the Dow nudged marginally higher before reversing and starting to head south. Then around mid morning reports started coming through about the plane crash which helped push prices lower and this downward push accelerated in the afternoon.

Now I have a problem with news related moves. I view the moves as kind of artificial. I like the market to do its own thing without “outside influences”. The market can be like a little kid. Let’s call this kid Johnny. Johnny likes jumping off the couch. So he first climbs up on the couch. He then ventures to the edge and just before jumping Dad gives him a push and Johnny unwillingly jumps to the floor. That leads to a tantrum before he climbs back up to do it again. He has to do it himself. And in many ways the market is no different. It has to act of its own accord. It has to do things itself without being pushed. The news out of Ukraine was the push to send the market down. But as the market has to do it itself, it rallies or climbs back to where it started before it was pushed. The Dow was around 17120 before the plane crash news hit just after 11am. So perhaps the Dow can climb back to this level before jumping off again. And in this case the market is potentially jumping off the precipice!

I have also drawn the uptrend line from the February low and breaking that would signify the uptrend is most likely over. That support level is currently around 16900 and rising. Just a whisker away!

FOOTSIE DAILY CHART

The Footsie is now showing a pattern of lower lows and lower highs on the daily chart – a bear trend. I have labelled the lows LL1 and LL2 while the recent lower high is LH1. Now we await the next lower high, LH2 which will hopefully be accompanied by a RSI reading that doesn’t break the down trending line. But where will that next lower high be? Well, I have drawn Fibonacci retracement levels of the down leg from the 4th July high to the 10th July low. So far, price has found resistance at the 61.8% level. Price actually went as high as 6792. I suspect that is it. Now price looks to have a little upward momentum currently so perhaps price can rise next week and tickle Thursday’s high at 6785. This is where I think price will turn back down and can be seen in the green highlighted circle. But that’s just my opinion.

Now, what if I’m wrong and price continues higher? Well, I don’t think my analysis is wrong but the market will be the one to decide that. So as a contingency plan, I looked at another possible level which is the 76.4% level which is at 6820 and can be seen in the orange highlighted circle. And if this were to occur then perhaps the Dow would also head to new highs with one last short covering rally up to around 17200. Much higher and I’m just completely wrong. But I’m not into any coulda, woulda, shoulda nonsense. I believe the tops are in. If you’re confident in your analysis, then sometimes you just have to grit your teeth and stick to the plan.

For those that like to skip to the conclusion, put simply, the VIX is rumbling and ready to rock n roll while the Dow and Footsie look to be peering over the edge but got a bit frightened on first look. Take the plunge!

Bio

I have studied charts for over 20 years and currently am a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts there seemed to be a dearth of technical analysts, at least ones that had a reasonable idea of things. So my aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com

© 2014 Copyright  Austin Galt - 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 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