Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Weakening Trend

Stock-Markets / Stock Markets 2015 Mar 02, 2015 - 03:01 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend - Bull Market

Intermediate trend - Is the 7-yr cycle sketching an intermediate top?

Analysis of the short-term trend is done on a daily basis with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which ultimately indicate 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 ajg@cybertrails.com.

WEAKENING TREND

Market Overview

Last week, the market appeared to lose a little more of its upside momentum. After making an all-time high, SPX gave back a little over six points, which is not very much, but it is a departure from the previous four weeks during which it recorded an advance of nearly 120 points. This could be the beginning of a pause before resuming its uptrend. A retracement of 40 to 60 points from the high would be a normal correction of the move from 1980. More would suggest the possibility that an intermediate decline is taking hold.


Indicators survey

The weekly trend is up, but the momentum oscillators continue to make lower lows as the market makes higher highs. This has the effect of increasing the negative divergence in these indicators. As for the daily ones, they appear to be on the verge of giving a sell signal.

Last week, I pointed out that breadth was beginning to show some weakness. This can be seen in the performance of the McClellan Oscillator which has barely stayed positive for the past 10 weeks and turned down last week. A similar period of weak readings last year was followed by a strong correction. Is something similar in the offing?

NYSE McClellan oscillator Daily Chart

Some short-term distribution appears to be taking place in the 1X Point & Figure chart. The longer-term 3X chart may be engaged in making a large rounding top formation. Perhaps this is due to the topping of the 7-year cycle which has not quite started its declining phase, yet.

Chart Analysis

We start with the weekly SPX (chart courtesy of QCharts.com, including others below) with the McClellan Summation Index (courtesy of StockCharts.com) posted underneath it.

 

Soon, I may be able to stop repeating that deceleration in the weekly MACD -- which has been going on for over a year - will eventually lead to deceleration in price. If we should get a correction from here, it will be the first time that weekly prices have failed to make it all the way to the top channel line of the (blue) intermediate channel. Of course, it will take a few more weeks to establish this as a fact. But if it is, it will support the view that a slowly developing rounding - top pattern is forming, a possibility which is a little more obvious in the P&F chart. Even if this were so, it would not prevent the index from making other higher highs, but each clearly showing a loss of momentum in the overall trend from 2009.

The oscillators look as if they are getting ready to roll over. The McClellan Summation index did surpass its former high, but this has generated some negative divergence in its MACD histogram. Also, its RSI (not shown here) has generated a strongly overbought pattern which is ripe for a return to the lower part of its range.

The daily chart shows that the SPX tried on multiple occasions to get above the lower channel line of the previous trend but without succeeding. It looks as if it has finally given up and opted for a correction instead. It has already pierced through the pink MA, but must go through the green one to confirm that it has started to correct. (I mentioned above what kind of a decline could be expected if this were the case.)

The oscillators are all rolling over, suggesting that a decline is beginning to take hold. Only if the pull-back were to extend to the recent low of 1980 would there be a risk that an intermediate trend has started.

The hourly chart, shows that with the middle oscillator at its low and divergence in the A/Ds (bottom) there is a good chance that Friday found a near-term low, especially since we've reached a support level which has been tested a couple of times before, as well as the bottom of two channels (red and yellow).

A short bounce followed by a break below all that support would pretty much cinch that a correction has started. The first target would be the horizontal red line below; and the next, if it is broken, the former tops a little lower.

Sentiment Indicator

The pull-back of a few days has already caused the sentiment index to readjust to 'greed' instead of 'exterme greed'. But I suspect that a rebound in the market would drive it to extremes again. On the other hand, if a decline should start, we would probably have to get it back into the red before a low is reached.

Sentiment

VIX (NYSE Volatility Index) - Leads and confirms market reversals.

VIX has gone sideways for three days and is holding at its recent low. It does not offer any prognosticating value at this time.

XLF (Financial Sector SPDR) - Historically a market leader.

XLF has also done little during the past week, except to hold on to its relative weakness to the SPX.

UUP (dollar ETF)

UUP is trying to overcome its resistance at the top of its long-term consolidation channel. It's not yet enough penetration to forecast that it is ready to move higher. Give it more time!

GLD (Gold trust)

GLD has found support where it should. More time will be needed to evaluate whether or not it is ready to challenge its downtrend line once more.

USO (US Oil Fund)

All indices showed little activity last week and USO was no exception. It is not clear if it is ready to challenge its downtrend line or re-test its recent low. We should know by next week.

Summary

The past week showed low volatility. SPX has been decelerating over the past two weeks and looks ready to start a minor correction. We should know this coming week if that is its intention.

FREE TRIAL SUBSCRIPTON

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: info@marketurningpoints.com

 

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

you to visit my website at www.marketurningpoints.com. 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 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