Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Sheffield "Mi Amigo" Memorial Fly Past at 8.45am on 22nd Feb 2019 - 20th Feb 19
Here’s The Real Reason You Stress About Money - 20th Feb 19
Five Online Marketing Predictions that will Matter in 2019 - 20th Feb 19
Has Gold Price Reached Upside Resistance Near $1340-1360? - 20th Feb 19
So Many Things are Not Confirming Stock Market Rally - 20th Feb 19
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Stock Market SPX Downtrend Underway

Stock-Markets / Stock Markets 2016 Sep 10, 2016 - 06:48 PM GMT

By: Tony_Caldaro

Stock-Markets

Another boring week until Friday. The market started the week at SPX 2180. After opening at SPX 2184 on Tuesday, it dropped to 2175 in the first hour of trading, then hit a higher high at the close. On Wednesday the SPX hit the high for the week at 2188. After that it declined into the close on Friday. For the week the SPX/DOW lost 2.3%, and the NDX/NAZ lost 2.4%. Economic reports for the week were light and slightly positive. On the downtick: ISM services and the Q3 GDP estimate. On the uptick: consumer credit, investor confidence, and weekly jobless claims improved. Next week, another options expiration week, reports will be highlighted by industrial production, the CPI/PPI and retail sales. Best to your week!


LONG TERM: uptrend

Quite an interesting market. While the free market enthusiasts continue to complain about the central bank interventions. The bulls and the bears had been locked in a 1.5% trading range for the past eight weeks. Last Friday FED chair Yellen, in her Jackson Hole speech, suggested no rate hikes until at least December. Right after her speech, in an interview with vice chairman Fischer, he, and a chorus of other Fed officials this week, suggested a rate hike could be on the table as soon as this month. Then on Thursday, when the ECB president Mario Draghi failed to meet market expectations of an expansion in the EQE program, the markets began to selloff. Notice what is driving these markets. It’s not fundamentals, which remain moderately positive. It’s central bank rhetoric!

The long term view remains unchanged. The key US indices are in long term uptrends. While many of the foreign markets, and secondary US indices, appear to be in long term uptrends as well. We continue to carry three counts on the US markets displayed on the SPX, NYSE and DOW charts. Last week we upgraded the most bullish count to a 40% probability, and placed a 30% probability on the other two counts. See previous weekend updates for details. In summary.

The DOW count suggests a new bull market began in February 2016.

The SPX count suggests an irregular ongoing bear market has been underway since 2015.

The NYSE count suggests the bull market from 2009 is still underway, and will not likely end until this index makes new all time highs.

MEDIUM TERM: downtrend

As noted above. For the past eight weeks the SPX had remained in a record 1.5% trading range. This week the NDX/NAZ/NYSE all made new uptrend highs. Yet, the SPX/DOW had not made an uptrend high in nearly four weeks: since August 15th. When short term selling began on Thursday, due to the ECB disappointment, this negative divergence came into play. As a result the indices moved more in one day, than it had moved in the last eight weeks.

As a result of Friday’s selloff all four major indices are in confirmed downtrends. The uptrend from the late-June Br-exit low did complete five waves up, with the fifth wave ending in an expanding diagonal triangle. Friday’s selloff confirmed the count and this new pattern.

With a downtrend underway there are several levels of support right under the market. Fibonacci retracement levels suggest the following SPX: 2117 (38.2%), 2093 (50.0%) and 2069 (61.8%). Since the fifth wave was the weakest wave there is support between waves 1 and 2, SPX: 2074-2109. Then we have the OEW pivots. In our review of the 2015-2016 bear market we uncovered a few new pivots. Therefore pivot support is at SPX: 2116, 2085 and 2070. Combining all these levels the first support is the 2116 pivot range, second the 2085 pivot range, and third the 2070 pivot range. All that analysis and it still leads to the three pivots. Medium term support is at the 2116 and 2085 pivots, with resistance at the 2131 and 2177 pivots.

SHORT TERM

During the uptrend we had noticed that wave three was shorter than wave one. This suggested that wave five would be the shortest wave. And it was. What we didn’t figure was that it would be so short and take over one month to unfold. But I guess neither did anyone else.

Since Friday provided a very sharp selloff we do not think this downtrend is going to last too long. Hourly and daily RSI are already extremely oversold. Plus the weekly RSI is already close to the low of the last downtrend. Should the downtrend continue lower over the next day or so it could bottom. If the market bounces Monday/Tuesday it is likely to require a retest of the lows before bottoming. Either way next week could be a reversal week for the downtrend. Short term support is at the 2116 and 2085 pivots, with resistance at the 2131 and 2177 pivots. Short term momentum ended the week extremely oversold. Trade what’s in front of you!

FOREIGN MARKETS

Asian market were mixed on the week for a gain of 0.7%.

European markets were mostly lower for a loss of 0.8%.

The Commodity group were mixed and gained 0.6%.

The DJ World index lost 1.2%.

COMMODITIES

Bonds continue to downtrend and lost 0.4% on the week.

Crude appears to be in a volatile uptrend and gained 3.2%.

Gold appears to be in an uptrend too and gained 0.6%.

The USD is still in a downtrend and lost 0.6%.

NEXT WEEK

Monday: a speech from FED governor Brainard at 1:15. Tuesday: the budget deficit. Wednesday: export/import prices. Thursday: weekly jobless claims, retail sales, the PPI, the Philly/NY FED, industrial production and business inventories. Friday: the CPI, consumer sentiment and options expiration. 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

© 2005-2019 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