Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Adaptive Fibonacci Price Modeling System Suggests Stock Market Peak May Be Near - 15th Aug 20
With Gold Above $2,000, Bulls Triumph! What’s Next? - 15th Aug 20
Stock Market, Asset Price Crash Dead Ahead - 15th Aug 20
NASDAQ vs. DJIA: Does the Recent Divergence Matter? - 15th Aug 20
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

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

Stock Market Upside Objective Reached

Stock-Markets / Stock Markets 2016 Apr 24, 2016 - 06:15 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long-term trend: The beginning of a lengthy correction may be underway!

SPX Intermediate trend: Potential rally top.

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.

UPSIDE OBJECTIVE REACHED

Market Overview

Last week, SPX found it difficult to reach the extreme target projected by the 2043 re-accumulation pattern, and it had a 30-point pull-back to 2081 before bouncing from this important support level. It's fair to say that if we exceed this level before making a new high, we will have a short-term top in place.

As long as the rally from 1810 did not exceed 2075, we could think of it as a rally in a downtrend. But when the index refused to decline below 2033 and made a new high, it moved from a red zone to a grey one and, as stated several weeks ago, if it should move beyond 2116, we may have to start thinking green again, depending on market dynamics. Already, even some of the most dedicated bears are having second thoughts. This is why sentiment indicators are pointing to at least a short-term top. But unless a decline substantial enough to drop significantly below 2033 materializes, the risk of new all-time highs will remain.

The base that was formed at the 1810 double-bottom can be divided into three phases, each carrying its own count potential. The first, as you may recall, projected a rally to about 2070/2080. The second (an extension of the first) gave us a target of 2116, which was subsequently reinforced by the re-accumulation pattern at the 2043 level, which carries essentially the same count (2123). This re-confirmation practically necessitates that we should find at least a short-term top in this area. So far, we reached 2111 before backing-off, the first sign of authentication, and perhaps all we get on the upside.

The third count potential would be to consider the entire double-bottom as the base, and this would allow for a move to 2400 -- which seems a little bit of a stretch. A more sensible approach would be to extend the count to only include the next minor phase, giving us a goal of 2210.

Given the current market internals, next week could turn out to be a significant time frame.

SPX Chart Analysis

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

There was no need to redraw any of the main trend and channel lines from last week. They continue to give a good representation of the market's trend. With Friday's pull-back, a minor trend line was breached, but nothing serious, and it's easy to see why we found support where we did! If you look to the left, the dashed line extends all the way to the last short-term peak before the January decline. We'll see all this better on the 60m chart, and if we should go lower right away, the next support is at 2074.

The 60m chart will also show that the hourly indicators have already turned up, suggesting that we could extend our bounce into Wednesday's FOMC meeting. At Friday's close, the daily indicators were weakening, but had not given a conclusive sell signal and it would be normal to do some additional distributing before moving lower. On Friday, the A/Ds remained positive all day long and closed near their highs of the day, adding to the possibility of extending the bounce.

In fact, breadth is what has been the bears' nemesis throughout this entire rally. If you look at the NYSE Summation Index (courtesy of StockCharts.com) which I have posted under the SPX, it must have been difficult for bears to remain complacent during this uptrend. I did point out that many leading indexes are under-performing and that the NYSI strength may be misleading since it could be attributed to the sudden resurgence of oversold commodity-related equities, but we should not totally ignore it. Over the short-term, the NYSI is showing some negative divergence in its MACD and RSI, and that also points to a short-term top.

Hourly chart

Although we have ascended from the lows through a series of 5-wave patterns, notice that the waves overlap and therefore can only be classified as corrective. This continues to suggest that, in spite of the strong price and breadth showing, we should still be inclined to consider this move as a rally in a downtrend.

The channels remain the same as those drawn on the daily chart. We can see that the price deceleration process is slow. Although we've moved out of the blue channel, we continue to hug that lower channel line as we make new highs, and we have not been able to move very far away from the top black channel line. After the 2075 top, the correction could not progress beyond the top third of the black channel (black dashed lines). When we do, a deeper correction will be underway and we will likely find support on the two-thirds dashed line before dropping down completely to the bottom of the black channel. If we do get that low and break through, we may have a chance to resume the more severe downtrend that we thought we had started. But that's still far away and we'll have plenty of time to re-examine the longer-term market action.

Time will also be a constraint for the decline which is about to start, since the next significant low should come along with the bottoming of the next 23-25 week cycle which is due in June.

SPX et al...

We've gone back to the daily charts this week, so that we can more easily observe some of the changes which took place last week. Some of the weak got stronger, i.e. NYA and XBD, and some of the strong got weaker, namely QQQ and SMH (not shown here). This lack coherence among leaders may only be noise, for now, but I hold the belief that we cannot not get real weakness in the overall market until SMH, QQQ and IWM lead the way. If these three indexes start to weaken in concert, we'd better pay attention, especially if they are joined by the TRAN.

UUP (Dollar ETF)

"The dollar has continued to correct but, after reaching the bottom of its down channel while showing positive divergence in the indicators, it is attempting to reverse." And last week's action enhances that possibility. The price action is reflected in the indicators, and their action encourages buying in self-reinforcing reciprocity.

A rally in the dollar will have a measurable effect on the performance of the following two indexes over the next few weeks.

GDX (Gold Miners ETF)

I have posted a chart of GLD under that of GDX so that we can readily see how much weaker GLD really is. If we have another six weeks to go to the bottom of the 25-wk cycle, there could be some significant short-term decline in both indexes. Another 7 or 8 points in GLD would not be surprising.

GDX does not have the same P&F chart formation and it is not as easy to determine the potential extent of its retracement. However, it may become more predictable as we move forward. In the meantime, the parallel trend lines have a good record of producing support and resistance and they can be used for near-term price projections.

USO (US Oil Trust)

USO may be less subject to the dollar's influence than gold, but not entirely, and it may find it difficult to move much higher if UUP (above) begins a good rally. Furthermore, if USO cannot extend its move any higher over the near-term, it may be ready to re-test its low and perhaps even go fractionally lower.

Summary

Now that the objective of the rally's extension has essentially been reached, the SPX should be ready to reverse. A correction starting from here would be expected to last until June. The amount of weakness which develops during this time frame should give us clues about prospects for the intermediate and long-term trends.

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