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
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
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

Is an Important Stock Market Top in Place?

Stock-Markets / Stock Markets 2015 Apr 06, 2015 - 02:02 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 important 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

Next week should tell us!

Market Overview

Since the SPX made a lower high on 3/23, preserving 2119.59 (which occurred on 2/25) as the all-time high, the index has shown little incentive to try for a new high. Instead, last week's activity consisted of a sideways pattern with descending peaks, in what looked like a distribution pattern which was restrained on the downside by an essentially flat trend line drawn from 2040 which had stopped four short-term attempts at going beyond it. The entire formation looked as if traders were waiting for some sort of a catalyst to push prices below that trend line and the 2040 level. The trigger was probably provided by the disappointing jobs report which was released on Friday morning since futures closed down 19 points for the day, the equivalent of 2047 on SPX, 4 points below that key trend line.

The June futures closed down 19 points at 2039.95, barely above the 2039 support level which has been holding prices since March 11, and which has been tested 5 times including Friday. Considering the market action since the 2119 SPX high, I don't have to warn you about the significance of Monday morning's opening prices! If, after breaking the trend line, SPX also breaks below 2040, it will all but confirm that an important top has been made!

Indicators survey

Weekly, daily and hourly momentum indicators are neutral at best, since they did not register Friday's sharp decline. Had they, all would be in a sell mode.

The Summation Index (chart below courtesy of is also on neutral and hardly changed from last week. If the market declines next week, it could display a significant change.

The 1X P&F chart now shows a pattern of what could be significant distribution above the 2040 level. The 3X chart looks more and more like a massive top is in the process of forming.

Chart Analysis

On the daily chart (courtesy of, as well as others below) I have simulated the price and oscillator action as if it had registered on the chart because of the shortened futures trading period.

Last week, I mentioned that the previous week's failure of the SPX to make a new high could be a game changer. This week's action could be even more so. By closing at 2047 (down 19 points for the day) the index has put itself in a very precarious position. It closed below the red trend line drawn across the lows and right on the 120-DMA. It would be surprising if the downside momentum experienced Friday did not push prices lower to the next support level which consists of the two dashed trend lines with the 200-DMA in between. Should that support level give way, we could expect prices to continue droping all the way to the lower dark blue channel line. There is more than enough (emphasis on more) distribution above the 2040 level to carry the prices that far. If that does take place, it would simply be a normal continuation of the pattern that has been forming since the rally from the October low. This would be the minimum expectation. However, if the entire formation above the 1972 level is taken into consideration ... well, let's save this for some other time! Just be aware that there is enough distribution above 2040 to potentially carry prices well below 1972.

On the hourly chart, Friday's activity looks even more dramatic (and negative), considering that the 19-point drop took place during the 45-minutes during which futures were open for trading. I have not tried to simulate the effect on the oscillators since I have no idea how this price drop would have affected them, but I have placed a vertical red line representing the price action. One would think that it made a sizeable impact on the momentum oscillators.

The red trend line across the four short-term lows only goes back to 3/11, but the green support line slightly above the 2040 level goes all the way back to 2/9. Breaking both would be a significant sign of weakness. I have already pin-pointed the potential price repercussion of breaking this support. If you wish to know what it is, sign up for a free trial.

Unfortunately, none of the indexes followed on a regular basis will be representative of what really happened last week since Friday's activity is not factored into them. Consequently, I will simply show the charts as they appeared at Thursday's close and not do any analysis until next week.

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

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

UUP (dollar ETF)

GLD (Gold trust)

USO (US Oil Fund)


For some time I have been pointing out the long-term deceleration pattern which was taking place in the SPX. Last week I also mentioned that the index's inability to make a new high before being pushed back toward previous short-term lows might be carrying some special warning. Finally, I have noted upon several occasions that the 2040 level has become a key support level.

On Friday, the disappointing jobs report triggered a negative reaction in the futures, dropping them 19 points during the 45m of a shortened session and closing them essentially on their 8-week low which had resisted penetration several times during that period. One does not have to be a genius to visualize what this could portend for Monday's opening and beyond.


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