Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Consolidation?

Stock-Markets / Stock Markets 2016 Dec 18, 2016 - 06:51 PM GMT

By: Andre_Gratian


Current Position of the Market

SPX Long-term trend: If the market strength persists, the long-term trend may need to be re-evaluated.

SPX Intermediate trend: SPX intermediate P&F count to 2270 has now been met, but there are higher counts that could still be filled before a serious reversal take place.

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


Market Overview

Upon reaching the lowest of the three projections I gave in the last letter (2770), SPX had a thirty-point pull-back. The trigger was the Fed's first interest increase in a year and the likelihood that there will be several more next year. Although the consolidation is only three days old, the Point & Figure chart shows that a lot of stock has already changed hands, and we may be ready to make an attempt at resuming the uptrend.

There are potential higher projections for the uptrend which started at 1810, even beyond those given last week, so we may not be ready for a serious correction just yet despite a sentiment index which still shows extreme greed. Additionally, market breadth, as depicted in the NYSI (below, courtesy of has lagged noticeably since the beginning of the "Trump rally". And finally, the relative weakness of the QQQ to SPX completes a trifecta of underlying negatives which belie the current market strength. However, only when price itself begins to show more than temporary weakness can we surmise that a serious correction has begun, starting with the breaking of the trend line from 2084. 

NYSE McClallan Summation Index Daily Chart


Daily chart

Since its beginning at 1810, the SPX chart pattern is taking on the appearance of a diagonal (an ending diagonal for the bull market?). If we cannot improve on this formation, considering the negatives pointed out in the Market overview, and especially if we turn the current consolidation into a correction and break out of the short-term channel -- which itself looks like a diagonal – the bearish case will have strengthened. Of course, that's a lot of "ifs" and it would take an extension of the decline below the dashed line before things really start getting bearish.

A look at the oscillators shows that over the short term, the A/D indicator has the same sluggish pattern that appears in the intermediate chart of the NYSI above. The MACD has turned down and may be ready to make a bearish cross, but it topped without showing negative divergence and would have to decline a good deal more to show some real weakness. The SRSI did give a sell signal as it made a bearish cross and, more importantly, it exhibits negative divergence in its slower (blue) MA which has stopped going up but cannot roll over unless the index declines further.

This chart and others below, are courtesy of

Hourly chart

After having spent most of Friday's session going sideways in a very narrow range, the hourly chart looks ready to turn and, at the very least, challenge the strong resistance level of 2270ish. I have drawn two converging channel lines which suggest that the short-term pattern is also beginning to look like a diagonal. Prices could push a little higher without altering the formation, but if much more strength develops, not only the short-term diagonal would be at risk, but the intermediate one as well.

Enough accumulation has already taken place to send prices up to the 2300 level if SPX can get past the 2270 and 2286 resistance levels. In fact, there is enough accumulation to move up to 2330, but the pattern is divided into several short projection phases, and a resumption of the advance could stop after completing any one of them.

While the daily oscillators are still in a decline, the hourly are oversold and ready to turn up. This is particularly evident in the A/Ds which remained positive during all of Friday's trading.

An overview of some major indexes (Weekly charts)

A consolidation of a few days has not changed the weekly pattern, and it remains essentially the same as it was last week. The QQQ did make a slightly new high, but it is not yet enough to significantly lessen its relative weakness to SPX.

UUP (dollar ETF)

UUP took advantage of the rate increase to surge to a 7-year high. It could push to about 27.00 before beginning to consolidate. But we need to keep in mind that higher levels are still likely, with prices eventually reaching at least 28-29.

GDX (Gold Miners ETF)

GDX's reaction to the interest rate hike was the exact opposite of UUP's.  It has now declined to the lower projection levels of 18.50-19.00 which were discussed in previous letters. Unfortunately for the gold enthusiasts, this may not be the end of the correction and, after a rebound of sorts, there could be another drop to about 16.00. Some real buying causing a break of the major downtrend line would need to take place before we could say that an important reversal has occurred.

Note: GDX is now updated for subscribers several times throughout the day (along with SPX) on

USO (U.S. Oil Fund)

USO has come to a decision point whereby it must show some immediate new strength in order to achieve a breakout of its base, or it will fall back to the level of its previous short-term lows.


SPX is consolidating after reaching the lowest of the projections given in the previous letter. It is not clear if the index is already capable of extending its move beyond the 2270 resistance level. The hourly indicators appear ready to push higher, but the daily are still correcting. A little more time is needed to decide. In any case, it would be premature to call this the start of a major top.



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:


For further subscription options, payment plans, and for important general information, I encourage

you to visit my website at 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 - 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