Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

SPX Stocks Index At Tipping Point

Stock-Markets / Stock Markets 2016 Mar 13, 2016 - 06:01 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend:  Severe correction underway.

SPX: Intermediate trend – .618 retracement reached as well as total projection.  End of rally likely.

 Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discuss 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

 

SPX AT TIPPING POINT 

Market Overview

Last week’s headline was: “MAX. PROJECTION 95-100% COMPLETE…”  At the time, the SPX had registered a high of 2009 (95% of the count) and was starting to correct.  That correction lasted until it had reached 1970 on 3/10, at which time traders decided that they should go for that extra 5%.  Last Friday, SPX closed at 2021.94, just a few points shy of reaching the full projection. 

Intermediate and long-term P&F counts have been accurate the great majority of the time and should be taken seriously.  At what point would the current forecast be wrong?  If the index continues to rise beyond 2043, the premise that we are in a “bear market” would begin to face a challenge. 

When we reached 2009 and started down, some technical conditions which normally occur at a top and warn that a serious reversal is about to occur were still missing.  Namely, negative divergence in the daily indicators!  This condition is now in place -- as we will see when we analyze the charts.  We will also see that the hourly indicators are running out of steam.  And, another important feature may have been added:  the creation of an exhaustion gap which occurred on Friday at the opening.  It will be confirmed as such if we reverse and close it in a few days. 

I have hesitated calling the current downtrend a bear market, preferring to label it as a “severe correction”.  My reason is that the distribution pattern which was formed between May and August 2015 has a “strong” count which could result in a decline to about 1500.  If we stop there, we would only have retraced a little more than .382 of the entire bull market!  However, if we take into consideration the distribution phase (weak count) which occurred prior to the May peak of 2135, the decline could extend another 450 to 1050 points. In other words, the worst case scenario could have us retrace 70.7% of the bull phase, with a good possibility of stopping at a 50% retracement (about 1388). 

SPX Chart Analysis

Daily chart (This chart, and others below, are courtesy of QCharts.com.)

The chart below focusses on the current countertrend so that we can examine it more closely.  Since last week, the index traded outside of its original wedge pattern, but the rally of the past two days has created a larger wedge with Friday’s move back-testing the original lower trend line.  The move also stopped at the bottom of the second layer of overhead resistance which was discussed last week.  Perhaps more relevant, the entire pattern from the 1810 low has now taken the form of the wave formation that I original proposed: 3-3-5, which now looks complete.   If that’s the case, we have to consider the larger formation, with 1810 representing the end of A (from 2116) and now B complete, or nearly complete, inferring that C is ready to begin and go below A (1810). 

Note that wave 3 of c ended without decelerating, which is the reason why at the end of last week, the daily momentum indicators were not showing deceleration either.  Only the A/D oscillator did!  This past Friday’s move went to a new high but the momentum oscillators did not, which gave us the negative divergence which had been missing while at the same time, the A/D oscillator is showing even more negative divergence. 

We’ll discuss the “exhaustion” gap in our analysis of the hourly chart where it is much more visible.

Hourly chart

A couple of things can be seen on the hourly chart that are not possible to see on the daily.  One is that the last wave of the structure (which starts at 1970) already has 5 waves in place.  It’s only a question of whether wave 5 is complete.  On the 3m chart, it looks like it is since you can break it down into 5 smaller waves.  In that case, there would be no reason why we could not start Monday morning with a declining market.  We may get an indication from the Globex futures on Sunday evening. 

The other thing is the gap opening on Friday morning.  It is marked on the chart in light blue.  For confirmation that we have a reversal of the trend from 1810, we not only have to close it, but we have to decline below 1970.

A sign that the rally from1970 is coming to an end (as the structure indicates) is that all the oscillators are already showing some significant deceleration, some of which could even be categorized as negative divergence.  When all three show a bearish cross of their MAs, it will be a confirmed short-term sell signal. 

  • SPX vs. TRAN (Dow Jones Transportation average) and IWM (Russell 2000 ETF)
  • To our habitual comparison of the SPX with the TRAN, I have added one more chart on the right: that of the Russell 2000 ETF (IWM).  The latter is also one of the most sensitive leading indexes when compared to the SPX.  All three charts are 60m charts.  In these charts, we are looking at the SPX from another perspective, to see if relative weakness is beginning to show in some of the prime leading indexes -- something that appears regularly at the end of significant market trends.   And indeed it is!
  • We have already discussed the propensity for the TRAN to lead as a matter of course.  At the top of this market cycle, the disparity was enormous issuing a warning of the coming decline by several months.  At the 1810 low, the TRAN reversed its downtrend well before SPX.  Presently, the contrast is not as pronounced (perhaps a matter of comparing waves of different degrees), but apparent nevertheless.  The last minor downtrend went a little lower than SPX and, in the current minor uptrend, TRAN has not even risen above its former short-term high, while SPX has exceeded it. 
  • The contrast is more pronounced in IWM.  The degree by which it is underperforming the SPX is more substantial, even though it also appears to have completed the same five waves as the other two in the last uptrend.  The divergence is even more noticeable in the IWM momentum oscillator.
  • The relative weakness of these two leading indexes to the SPX adds to the case being made for the rally from 1810 to be coming to an end.  Both of them appear to be making truncated 5th waves, which is also a sign of weakness. 

UUP (dollar ETF)

UUP has turned down again, extending its intermediate correction which is now about one-year long.  This is only a cursory analysis, but it appears that the index may be close to completing its correction.  If it holds around the 200-DMA and starts up, this could be the beginning of a genuine uptrend.  The indicators may be in a position to establish some positive divergence.  Let’s give it a few more days. 

GLD (SPDR Gold Trust)

GLD has been stuck at the top of its green channel, and was recently repelled by the larger red channel.  The indicators have developed some significant negative divergence and even begun to turn down.  There may be one last chance for one more try before beginning to correct.

USO (US Oil Trust)

I can’t see USO going past the declining red trend line, at this time.  The MACD has flattened out and the SRSI unsuccessfully tried to start a downtrend recently.  The next time it turns down, it may keep going.  Oil turning down would be a good excuse for the market to do the same.

Summary

The SPX may have decided to go for the last 5% of its intermediate base count, and may even have completed it on Friday.  But, as the saying goes: “The proof of the pudding is in the eating”. So, in spite of all the logical technical reasons given above for having completed its countertrend rally at this time, we need to wait for confirmation that it has indeed done so!

Andre

FREE TRIAL SUBSCRIPTION

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