Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Stock Market Primary IV Underway

Stock-Markets / Stock Markets 2014 Oct 11, 2014 - 12:11 PM GMT

By: Tony_Caldaro

Stock-Markets

Another wild and volatile week. The week started off calm enough, for this market, with a continuation rally gap up on Monday as the SPX hit 1978 in the first few minutes. Then the market declined to a slightly lower low for the downtrend at SPX 1925 by Wednesday morning. Wednesday afternoon, however, the market rocketed to SPX 1970 just before the close. Then after a quiet opening on Thursday the market gave it all back and made new downtrend lows on Friday. For the week the SPX/DOW lost 2.9%, the NDX/NAZ lost 4.2%, and the DJ World index lost 2.8%. Economic reports for the week were light, but decidedly negative. On the downtick: consumer credit, export/import prices, the WLEI and investor sentiment. On the uptick: wholesale inventories. Next week we get the FED’s Beige book, retail sales, industrial production, reports on housing, and it’s options expiration Friday.


LONG TERM: bull market

The five primary wave bull market continues, but we appear to be in correction mode now. Primary waves I and II ended in 2011, and Primary III appears to have recently ended in September. This suggests a potentially nasty Primary wave IV is currently underway. We counted Primary I as five Major waves with a subdividing Major wave 1, and simple Major waves 3 and 5. We counted Primary III as five Major waves as well, but with a simple Major wave 1, and subdividing Major waves 3 and 5. During Primary III Major waves 1 and 2 ended in late 2011, and Major waves 3 and 4 ended in early 2014. Major wave 5 divided into five Intermediate waves, with the fifth wave ending on September 19th.

Last weekend we pointed out several reasons why we expected Primary IV to be underway. The market had closed last Friday only about 2.5% off the all time high. We displayed charts of the NYSE, the DJ World index, and the R2K. All three had topped either in July or September and had already fully retraced their most recent uptrend. We also displayed how market breadth was declining despite the fairly significant rallies since September 19th. We also displayed how volatile Primary wave II was during its initial stages. Now the NYSE has nearly fully retraced the past two uptrends in only five weeks.

Since the September 19th all time high we have been in a downtrend, which has nearly fully retraced the entire Int. v uptrend. This suggests we have entered Major wave A, of a three Major wave, Primary IV. When Primary IV does conclude we should get a rising Primary wave V to all time new highs. The size of the Primary IV correction should help determine to length and duration of the Primary wave V to follow. A shallow Primary IV should lead to a short and quick Primary V. A steep and lengthy Primary IV should lead to a long and strong Primary V.

MEDIUM TERM: downtrend

Since second and fourth waves of bull markets are typically similar. A review of Primary II will helps us in determining what to expect during Primary IV. Primary II took five months to unfold, ended in an elongated flat, (similar to the 1987 crash), as the market lost 22% of its value. Since that wave formation was a flat we would expect a zigzag to unfold for Primary IV (alternation). The first two down legs of the Primary II correction would fit this scenario. They are easily observed in the weekly chart above.

Notice how the weekly RSI dropped to quite oversold during both of those declines. And, the MACD turned negative before the correction was over. Notice where we are now. Barely oversold on the RSI and still quite high on the MACD. This suggests not only are we in Major wave A, but Major wave C should take this market much, much lower. Since Major wave 5 was stronger than Major 1, we would expect support to be found at previous fourth waves of a lesser degree. The three levels we are looking at for a potential Primary IV low are: SPX 1738, SPX 1627 and SPX 1560; Major 4, Intermediate iv, and Minor 4 of Primary wave III.

The current downtrend, Major wave A, is dividing into three Intermediate waves. Intermediate wave A ended at SPX 1926, Intermediate wave B ended at 1978, and Intermediate wave C has been underway since then. We will get into more detail on this downtrend below. Medium term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots.

SHORT TERM

Intermediate A divided into three Minor waves: 1964-1985-1926. Notice how Minor a was a bit complex, and Minor c was simple. Then we had a strong simple rally for Intermediate B to SPX 1978. Intermediate C starts off with a simple decline to Minor a at SPX 1925, a strong rally to SPX 1970 for Minor b, and now we should get a somewhat complex Minor c. Which has already begun. What is also interesting about this downtrend is that many of the moves are approximately 55 points. Minors a and c of Int. A, Int. B, Minor a of Int. C, and now, Minute a of Minor c. Also two of the counter rallies, Minor b of Int. A, and Minute b of Int. C are approximately 21 points.

Since we are now, theoretically, in the last wave down of Major wave A. And we have several completed waves we can make some more precise Fibonacci calculations for its potential end. We first have a cluster of price/wave relationships between SPX 1879-1885. Next is the 1869 OEW pivot. After that we have another price/wave relationship right at the OEW 1841 pivot, and finally another at the OEW 1828 pivot. So with the exclusion of SPX 1879-1885 Major A should end at one of the three pivots under 1901. Since this downtrend has essentially moved pivot to pivot, i.e 1901, 1929, 1956, 1973 and 2019. It is likely to end at a pivot as well. We have an idea of how this last wave should unfold and will keep everyone updated in the daily updates. Short term support is at the 1901 pivot and SPX 1879/1885, with resistance at the 1929 and 1956 pivots. Short term momentum appears to be trying to set up a positive divergence again.

FOREIGN MARKETS

The Asian markets were mostly lower for a net loss of 1.0%.

The European markets were all lower losing 4.2% on the week.

The Commodity equity group were mixed for a net loss of 1.6%.

The DJ World index continues in a downtrend losing 2.8% on the week.

COMMODITIES

Bonds continue their uptrend gaining 1.2% on the week.

Crude continues its downtrend losing 4.7% on the week.

Gold remains in a downtrend but gained 2.7% on the week.

The USD may be in, or getting close to, a downtrend losing 0.9% on the week.

NEXT WEEK

Wednesday: Retail sales, the PPI, the NY FED, Business inventories and the FED’s Beige book. Thursday: Industrial production, weekly Jobless claims, the Philly FED, and the NAHB. Friday: Housing starts, Building permits, Consumer sentiment, Options expiration, and a speech by FED chair Yellen at 8:35. Busy mid to end of week. National holiday on Monday, but equity markets will be open. 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

© 2005-2019 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