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
If You Don’t Understand Bonds, You Don’t Understand Investing - 25th Aug 19
Gold's Next Move - 25th Aug 19
Fresh Water Crisis Unfolding - 25th Aug 19
Newbie Guide to Currency Pairs in Forex Trading – Review - 25th Aug 19
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
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
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

Market Oracle FREE Newsletter

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

Is Stock Market Minor Top Taking Hold?

Stock-Markets / Stock Markets 2015 Mar 23, 2015 - 05:20 PM GMT

By: Andre_Gratian


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


Market Overview

What a week! The Fed did it again! The SPX was potentially ready to extend its decline to lower levels after an 80-point drop from its all-time high of 2119 but, although we had amassed enough distribution on the Point & Figure chart to do so, the index found good support on an intermediate trend line and a key support level at 2040. The market then waited for the next Fed report which was due three days later to see if Janet had lost "patience"! She had, but she found another way to say in explicit terms that the Fed was in no hurry to raise rates. This instantly caused a massive short-covering rally of 45 points which retraced about 50% of its move before settling down for one day, and taking off again on Friday with a another 23-point move. "Vive la volatilite!" By Friday, however, SPX had pretty much exhausted the re-accumulation count at the 2092 level and looked ready for another pull-back.

The question is whether or not this is the beginning of another meaningful decline or, if after a minor correction we need to make another slightly new high before that happens. The wild swings of the last month have only reinforced the view that the market is in the process of making a large rounding top - probably the work of a topping 7-year cycle. At some point, its downward pressure will overtake the bullish forces which still have a slight advantage and the decline will accelerate into its low (which is still many months away). As long as SPX continues to show a long-term deceleration pattern, this is the view that I favor, but I am open to being proven wrong by the market.

Indicators survey

The two weekly momentum indicators have turned up slightly with the rally. The SRSI is essentially neutral while the MACD continues its hesitant pattern of long-term deceleration.

Breadth, as reflected by the McClellan Summation index (courtesy of has done little since the rally started. This could be a warning of more weakness ahead unless it begins to move up smartly. The long-term pattern's series of declining tops has the same implication as the SPX's weekly MACD.

A short-term count was reached on Friday, but it may only be a phase count. If the pull-back is moderate, there is room for a little more on the upside.

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

The daily chart (courtesy of, as well as others below) shows that prices held the trend line drawn from the October bottom to the early February low. It was a perfect hit and traders took advantage of that level to wait for the Fed's decision. Had if been negative, you can see how easily it would have been to challenge that February level. Now that we have 3 solid points on that five-month trend line, breaking it could bring some significant selling. However, as long as it is not breached, we can expect the uptrend which started in October to continue.

But what kind of a trend is that? After a gigantic short-term rally of 260 points in only six weeks, what has the market done? If you look at the tops created since then, you can see why it is easy to vizualize the (ever-so slow) formation of a rounding top! The blue trend line had been containing SPX highs since mid-2013 but lately, each short-term top has had increasing difficulty reaching it before turning down. So what can we logically expect the current rally to do? Probably follow the current trend, even if we make a sightly new high. The time to exercize more caution will come when we fail to make a new high. And even then, if we get progressively lower highs and lower lows, the acceleration of the steepness in the curve downward may not come for several more weeks.

The two bottom oscillators are pretty much mirroring the uptrend and are still not showing negative divergence. For the MACD, it's a different story! It had been very positive until the trend started to turn down, but retraced all the way down to the zero line during the decline. It has now turned up again, but the reversal is anything but dynamic.

On the hourly chart, I have drawn several (legitimate) trend lines that are converging at 2113, a level which is also the fulfillment of a short-term P&F count. This should provide enough resistance to cause a near-term reversal if the steep green trend line is broken, with a retracement down to the vicinity of the 200-DMA before another rally attempt is made. The longer-term trend lines at the top of the chart will make it difficult for that attempt to go beyond those levels, if they re reached at all.

The oscillators have started to roll over and are preparing to give a sell signal which could come as early as Monday morning.

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

Last week, I pointed out the lack of volatility in this index during the three-week decline by the SPX. I said that I was not sure if it was a bullish or bearish sign. Now we know! It was presaging another market rally.

On a longer term frame, I am noticing that the index seems to be very slowly turning up -- an inverse action to the SPX's rounding top, but starting a little earlier, around July 2014.

XLF (Financial ETF) - normally leads the market at important tops.

XLF begun to show relative weakness to SPX during the decline which started in December. It has retained that divergence while SPX continued to make new highs. In spite of some recent improvement in its relationship to SPX, its indicators suggest that it may be close to resuming its downtrend.

UUP (dollar ETF)

Last week's Fed report caused a temporary set-back (emphasis on temporary) to the USD's strong uptrend. If I did not have much higher potential P&F counts for this index, I might think that this could be the beginning of an important correction. I don't think it is and I believe that a new high will soon manifest itself.

GLD (Gold trust)

GLD has retraced back to the low point of its long term corrective pattern. It could hold here for a while, but with the bottom of the 25-wk cycle due in early May, betting on lower prices is probably the right thing to do, especially if I am right about the USD soon resuming its uptrend.

USO (US Oil Fund)

USO has tried unsuccessfully to break out of its steep down channel. It has been riding the outside trend line with lower and lower prices, and this may continue until it reaches its next projection of about 13. Even if it were to move outside of that line, it would probably continue to decline and form a deceleration pattern in the form of an ending diagonal which would likely complete in the vicinity of the target level.


Last week, I mentioned that several indexes were participating in the 3-week decline half-heartedly. We now know the reason why!

On Friday, the rally which started at 2040 has filled a phase projection at 2113 and come to a resistance level which should turn it down temporarily. There is a 60/40 chance that after a small correction, the index will make a slightly higher high before becoming vulnerable to a larger pull-back.


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