Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Fundamentals for Uranium look great; is the Uranium Market ready to soar? - 29th Aug 16
3 Ways to Profit from the Stressed-Out American Consumer - 29th Aug 16
Have The Markets Become Too Big to Fail? - 29th Aug 16
Pakistan Booming House Prices Housing Market Mania Kabza Mafia Warning! - 29th Aug 16
Post Yellen = Market Confusion - 28th Aug 16
Theresa May Instructs Police, NHS Gp's, Public Sector To Stop Racial Discrimination in Service Delivery - 28th Aug 16
Ignore Yellen and Buy the Dip in Precious Metals - 27th Aug 16
SPX Downtrend Should be Underway - 27th Aug 16
Unraveling the Secular Economic Stagnation Story - 27th Aug 16
The Precious Metals Sector and the Fed. . . - 27th Aug 16
Stock Market - All Is Calm, All Is Not Right - 27th Aug 16
Gold Junior Stocks Q2 2016 Fundamentals - 26th Aug 16
Buy Gold’s August Dip? Gold’s Monthly Sweet Spot In September - 26th Aug 16
The IMF’s Internal Audit Reveals Its Incompetence and Massive Rule Breaking - 26th Aug 16
Commodities Are the Best Bargain Now—Here’s What to Buy - 26th Aug 16
Why I Left Canada and Became A Citizen of the Dominican Republic - 26th Aug 16
The GLD vs GOLD - 26th Aug 16
Can Stocks Survive Without Stimulus? - 25th Aug 16
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Economy - 3 Secret Charts

First Uptrend of Stocks Bear Market

Stock-Markets / Stocks Bear Market Jan 24, 2016 - 03:56 AM GMT

By: Tony_Caldaro

Stock-Markets

The week started off at SPX 1880. After a Monday holiday the market gapped up to SPX 1901 on Tuesday, and then immediately headed lower. On Wednesday the market gapped down at the open, hit a new low for the downtrend at SPX 1812, and then began to rally. The rally continued through Thursday and Friday with the SPX clearing 1900, and ending the week at 1907. For the week the SPX/DOW gained 1.05%, the NDX/NAZ gained 2.60%, and the DJ World gained 0.90%. Economic reports for the week were mostly negative. On the uptick: existing homes sales and the Q4 GDP estimate. On the downtick: the NAHB, CPI, housing starts, building permits, leading indicators, the WLEI, the Philly FED, plus weekly jobless claims rose. Next week the FED meets Tuesday and Wednesday, and we get our first look at Q4 GDP.


LONG TERM: bear market

After a six year bull market it can be difficult to accept that we are now in a bear market. The market is being accommodative, as it has risen 1.4% since the bear market was confirmed a week ago Friday. This week we start off with the SPX monthly chart.

With the last three bull markets being three of the five longest bull markets in history it is a good place to make a technical point. The last five bull markets, the first two were short, are displayed on the chart: 1982-1983, 1984-1987, 1987-2000, 2002-2007 and 2009-2015. Notice the action in the RSI. During 1982-1983: the RSI got oversold only in the 1984 bear market. During 1984-1987: the RSI got oversold only during the 1987 crash. During 2002-2007: the RSI got oversold only during the 2007-2009 bear market. During the lengthy 1987-2000 bull market, the RSI got oversold twice: the 1990 and 1998 corrections. During the recent 2009-2015 bull market, the RSI got oversold twice again: the 2011 and 2015 primary waves. Now after rising back up during primary V, it is heading lower again with the bear market underway. A simple chart with a really good Fibonacci indicator.

The weekly chart displays the entire five Primary wave bull market, and just the early weeks of the new bear market. Primary waves I and II completed in 2011, and Primary waves III, IV and V completed in 2015. Since Primary V failed to make a new high, which we call a fifth wave failure, there must be something negative getting underway in the world’s economy.

Fifth wave failures of this degree, in the US, are so rare I do not recall ever seeing one. However, I might add, China’s SSEC experienced a fifth wave failure of one lesser degree in early 2008. This was an omen of the 2008 melt down. The fifth wave failure in the US may be an omen of another meltdown yet to come. As we have noted for several months, starting in October, it is time to prepare for a bear market.

MEDIUM TERM: potential uptrend underway

After the Primary IV low at SPX 1867 in August, Primary V kicked off in a somewhat choppy fashion. Major wave 1 rallied to SPX 1993, and was followed by an irregular zigzag Minor wave 2: 1903-2021-1872. After that Major wave 3 was quite a rally, hitting SPX 2116, for a 13% gain, in just 5 weeks. Then after an anticipated Major wave 4 to SPX 2019, Major wave 5 simply ran out upside momentum in its effort to make new highs. Not only did Primary V fail to make new highs. Major wave 5 also failed to make a high higher, and Intermediate wave v ended abruptly in a diagonal triangle. We could call this a triple failed top at SPX 2104, about 1.5% from the all time high.

The first decline from SPX 2104 was a complex three back to 1993 (high of Major 1). Then after a simple a-b-c rally to SPX 2082, the market headed sharply lower in another complex three down to SPX 1812. A level not seen since Q1 2014. At that low, which occurred on Wednesday, the market set up a positive daily RSI divergence from an extremely oversold condition and started to rally. In fact, using some metrics, the most oversold condition since the last bear market. We have labeled this low as a potential completed Major wave a, the first downtrend of the bear market. Medium term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots.

SHORT TERM

If the downtrend actually completed at that low we have an a-b-c decline from SPX 2104-1812 to start the bear market, and this is labeled Major wave A. The current potential uptrend should also be an a-b-c, and will be labeled Major wave B. What would follow then is an equal, or nastier, downtrend for Major wave C, to complete Primary wave A of Cycle [2].

Thus far the uptrend also looks corrective, as it should. We have observed a double three rally to SPX 1890, a pullback to SPX 1860, and now an ongoing rally to SPX 1908. We are labeling the first high Minor a, the pullback Minor b, and the current rally Minor c of Intermediate A. Then after an Intermediate wave B pullback, the market should do another Minor a-b-c to complete Major wave B. Now for some calculations.

Minor wave a was 78 points (1812-1890), and Minor b bottomed at 1860. If Minor c is 0.618 Minor a it already topped at SPX 1908. If it equals Minor a it should continue higher to SPX 1938. SPX 1908 falls within the range of the 1901 pivot, and SPX 1938 is just above the range of the 1929 pivot. If Crude continues its rally into Monday we are likely to see the higher target. Wherever it tops Intermediate wave B should find support around SPX 1860 (the 1869 pivot). Then Intermediate C should kick in for another rally.

Fibonacci retracements for all of Major wave B suggest three areas: SPX 1928 (38.2%), SPX 1964 (50.0%), and SPX 2000 (61.8%). Also when it does top I would expect the daily RSI to get overbought. Overall, this should be the last decent chance to exit or hedge equities for the next year to two years. Short term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Short term momentum is beginning to display a negative divergence. Best to your trading this volatile market!

FOREIGN MARKETS

Asian markets were mixed on the week and lost 0.7%.

European markets were mostly higher and gained 1.0%.

The Commodity equity group were mostly higher and gained 2.4%.

The DJ World index may be in an uptrend and gained 0.9%.

COMMODITIES

Bonds are uptrending but lost 0.1%.

Crude is downtrending but gained 5.1%.

Gold is uptrending and gained 0.9%.

The USD looks to be uptrending and gained 0.6%.

NEXT WEEK

Tuesday: Case-Shiller, FHFA housing and Consumer confidence. Wednesday: New home sales and the FOMC meeting concludes. Thursday: weekly Jobless claims, Durable goods, and Pending home sales. Friday: Q4 GDP (est. +0.8%), the Chicago PMI and Consumer sentiment. Best to your weekend and week!

CHARTS: http://stockcharts.com/public/1269446/tenpp

https://caldaro.wordpress.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 © 2016 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

© 2005-2016 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

Catching a Falling Financial Knife