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
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

How to Trade Elliott Waves

Stocks Bear Market Rally Underway

Stock-Markets / Stocks Bear Market Jan 30, 2016 - 04:39 PM GMT

By: Tony_Caldaro

Stock-Markets

Another volatile week! The week started off at SPX 1907, traded down to 1876 on Monday, then rallied to 1917 on Wednesday before the FOMC statement. After the statement was released the market traded down to SPX 1873, retested that low on Thursday, then rocketed higher on Friday to end the week at SPX 1940. For the week the SPX/DOW gained 2.05%, the NDX/NAZ gained 0.50%, and the DJ World index gained 2.10%. Economic reports for the week were positive. On the uptick: Case-Shiller, the FHFA, consumer confidence, new/pending home sales, the Chicago PMI, plus weekly jobless claims improved. On the downtick: durable goods, Q4 GDP, consumer sentiment and the WLEI. Next week we get reports on the PCE, the ISM’s and monthly Payrolls.


LONG TERM: bear market

After an unorthodox ending to a six year bull market, a bear market began in December 2015. Thus far it appears the market has completed its first wave down, Major wave a, of the bear market when it declined from the uptrend high at SPX 2116 to SPX 1812 in January. Since that low the market rallied to SPX 1909, struggled to make much progress for several days, and then rallied to SPX 1940 on Friday. This choppy nearly 130 point rally appears to be Major wave b, or the first uptrend of the bear market.

Typically uptrends during bear markets retrace anywhere from 38.2% to 61.8% of the previous, or larger, decline. The three retracement levels, as noted last week, suggested the following potential uptrend highs: 1928 (38.2%), 1964 (50.0%) and 2000 (61.8%). Anything more than that would be quite unusual. We had noted, also last week, that the first two levels were near the OEW 1929 and 1956 pivots. On Friday the lower level was easily exceeded, so the next likely upside target is the 1956 pivot range.

After this uptrend concludes, which may be soon, we expect the next downtrend, Major wave c, to start off in a choppy pattern and then to make new lows in March. When this begins we can then start to make some downside projections for its low. Bear markets are usually quite volatile in both directions. Uptrends are often good times to unload selective stocks, and/or hedge existing positions. Downtrends are often quite breathtaking. Since this is the first uptrend of the bear market it is probably the last opportunity to take advantage of higher prices.

MEDIUM TERM: potential uptrend underway

After the unorthodox bull market high at SPX 2104 we labeled the Major wave a downtrend to SPX 1812 as a complex zigzag: Int. a SPX 1993, Int. b SPX 2082, and Int. c SPX 1812. At the low the daily MACD was quite oversold, and the RSI set up a positive divergence. This is usually a sign that a downtrend may be ending in favor of a counter-trend uptrend. The market then rallied nearly 100 points in two days, kicking off the uptrend. And on Friday added to those gains.

While the downtrend took about 1.5 months to unfold, which is about normal these days. Uptrends during bear markets are usually quite a bit shorter. This potential uptrend has rallied nearly 140 points in just 8 days and is already nearing its upside retracement targets. Three of the five uptrends during the last bear market only lasted 2 – 4 weeks. And, the two that lasted longer were either retracing a larger pattern or a very steep decline. Neither of which has occurred yet in this bear market.

One last note. Typically during bear market uptrends they only manage to get slightly RSI overbought on the daily chart. The RSI is currently quickly approaching that level. Medium term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots.

SHORT TERM

After the Major wave A low we started labeling the Major B uptrend with three Intermediate waves: a-b-c. Intermediate wave a was a bit choppy, unfolded in an a-b-c, (1890-1860-1909), and topped at SPX 1909. Then we had a quite tricky Intermediate wave b, thanks to the reaction after the FOMC, that took the form of an irregular a-b-c pattern: 1876-1917-1873. Intermediate wave c kicked in off that low and has already unfolded in three waves: 1899-1886-1940. Although the last wave may not yet be complete.

When we compare Intermediate waves C and A during this uptrend, the mostly likely Fibonacci target is SPX 1971. This is where Int. C = Int. A. The other Fibonacci relationships have already been exceeded. Overall we are now looking at three possible levels to end this uptrend: OEW 1956 and 1973 pivots, and SPX 2000. Short term support is at the 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum ended the week extremely overbought. A short term negative divergence, and a medium term overbought condition could fit quite well for an uptrend high. Best to your trading!

FOREIGN MARKETS

Asian markets were nearly all higher on the week for a net gain of 1.3%.

Europe markets were also almost all higher for a gain of 1.2%.

The Commodity equity group were all higher and gained 5.5%.

The DJ World index appears to be uptrending and gained 2.1%.

COMMODITIES

Bonds continue to uptrend and gained 1.0% on the week.

Crude is trying to uptrend and gained 4.3% on the week.

Gold continues to uptrend and gained 1.7% on the week.

The USD confirmed its uptrend but only gained 0.1% on the week.

NEXT WEEK

Monday: the PCE and Personal income/spending at 8:30, Construction spending and ISM manufacturing at 10am, then a Monetary policy discussion at the CFR with FED vice chair Fischer at 1pm. Tuesday: Auto sales. Wednesday: the ADP, and ISM services. Thursday: weekly Jobless claims and Factory orders. Friday: monthly Payrolls, the Trade deficit and Consumer credit.

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