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
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Stock Market Consolidation Or Distribution?

Stock-Markets / Stock Markets 2016 Jun 06, 2016 - 08:20 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long-term trend: A lengthy correction is most likely underway!

SPX Intermediate trend: The H&S pattern has been invalidated and the index is re-testing the upper portion of its trading range.

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.

CONSOLIDATION OR DISTRIBUTION?

Market Overview

On a long-term and intermediate-term basis, the SPX is the strongest of all the major indexes. The Dow Industrials, which had been keeping pace with it, has recently begun to fall behind. On a short-term basis, SPX is close to reaching some projections which should bring a reversal when they are met. Because of this, and because of resistance directly above its current level, last week I mentioned that moving much higher could be a difficult task. For the past week, it has been trading in a 20-point range, again re-testing the 2085 level on Friday after the release of a weak jobs report, but re-bounding once more toward the top of the range by the close.

If, as cycles appear to imply, this is short-term distribution, there is probably enough of a count already accumulated to send it back down to the 2050-55 support, at least - providing that it can break decisively below 2085 with sufficiently negative breadth. On Friday, the weak jobs numbers initially brought about some good selling, but then it probably dawned on traders that such weakness might delay even more any interest rate increase by the Fed, and the selling turned to buying. Will this bullish thinking prevail as we start another week of trading?

Benefiting from the weak report, the precious metals group had its best performance in six weeks, while the USD slumped on the news. But that did not help oil, which was disappointed that OPEC did nothing to curb production at its Thursday meeting.

SPX Chart Analysis

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

The same trend lines and former peaks which were discussed in detail last week remain intact and should continue to provide overhead resistance if the index makes an attempt at moving higher. On Friday, there was a slight breach of the minor uptrend line, but prices rallied to close on it, so no real harm was done. For a decline to get underway, the 2085 level (marked by a red horizontal line) will have to give way, but even that would not create too much of a pull-back unless there is enough follow-through to break the black channel line with a close well outside of it. Should that happen, the 2040 level could be re-tested. Because we should be at the top of short-term cycle which could cause the index to decline into the third week of the month, the odds favor a correction but, since short-term upside projections have not yet been reached, prices could extend a little higher first.

If we fail to develop very much weakness over the next couple of weeks, the odds of making a new high will increase, especially if we cannot break outside of the black channel. Even if we do, holding above the 2040 level may still bring another challenge to the current bull market high. For now, the indicators seem to favor the downside. They have started to roll over with the A/D oscillator already being in a minor downtrend, which amounts to negative divergence with price. For real weakness to develop, however, we will need to see this indicator, as well as the MACD, go negative right away.

Hourly chart

Prices have moved outside of the smaller black channel, but without bringing much weakness. On Friday, the index found enough support at the 2085 former low and on the dashed trend line to re-bound in what could be a back-test of the broken channel line. If so, we could move a little higher on Monday to complete that test, or start down and break the lower red support line right away.

Both the 8hr and 21hr MAs have flattened out and will need to be penetrated on the downside once again, with a follow-through break below 2085 to give a short-term sell signal. Support at this level comes from the two short-term peaks at the left of the chart.

The indicators are also moving sideways, following the price trend. They will have to turn down sharply to signal the beginning of a correction.

SPX et al... (daily)

In the group of charts below, I have moved the SPX in the middle of the top row, and placed the DJIA above the TRAN for better comparison. Last week's action did nothing to unify the trends of the various indexes. The DJIA and TRAN got a little weaker relative to SPX, while IWM became stronger - although it is only catching up a little after lagging behind considerably. The DJIA and TRAN are also the only two who are already trading outside of their larger channels. XBD is right on it and should be the next one to break it.

With the two DOWs coming out of their channels, especially if XBD and the others follow, it will become a picture which suggests slowly rolling to the downside. But it will require some sustained weakness for this to take place and, for now, all we can do is wait to see what comes next.

UUP (Dollar ETF)

As the dollar was trying to move out of its correction channel, a poor jobs report sent it back inside and it will have to try again. This may or may not be a serious set-back. We'll have to see.

GLD (Gold ETF)

The dollar's demise sent shorts in gold running for cover. If you remember, commercial COTs had a huge short position. Are they wrong? GLD is a long way from resuming its uptrend, and this could be only a consolidation in a downtrend, but the miners fared a lot better. Now it's a question of whether or not they can muster follow-through strength.

USO (US Oil Trust)

USO ran into resistance where expected, but the set-back of the dollar prevented it from being affected negatively by the OPEC decision not to curb oil production. A greater pull-back is likely in the next few days.

Summary

The extension of the SPX rally has run into resistance and stalled. At the same time, it has essentially reached an area of short-term projections. If it cannot break out to a new short-term high and regain its upside momentum, it will attract sellers and reverse its trend -- especially if it moves and closes below 2085.

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