Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Stock Market Tad More Distribution Needed

Stock-Markets / Stock Markets 2016 Jan 09, 2017 - 03:15 AM GMT

By: Andre_Gratian

Stock-Markets

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 2300 is still possible before a reversal occurs.

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 anvi1962@cableone.net.

A Tad More Distribution Needed

Market Overview

The SPX 2270s resistance band halted the intermediate uptrend from 1810 for three weeks, but last Friday, the former high of 2277.53 finally succumbed to a marginal new all-time high of 2282.10. This must have required a superhuman effort on the part of buyers because, instead of punching through, the index immediately pulled back and closed at 2277.18. The Dow Industrials also made a new all-time high of 19,999.63, failing to reach 20,000 by 17 cents, and closing at 19,966.68!

Friday was ostensibly the high point of a consistent 15-day cycle which could continue to depress prices early next week but, despite this appearance of exhaustion, it is likely that the market will catch its breath in a few days, and make another attempt at reaching the 2300 projection which has been on our radar screen since the low of 1810 was made, but looked as if it was going to be usurped by the lower 2700 target. Any final high -- 2300 or not -- should come in the next one to three weeks. We are in the topping area of several intermediate cycles, one of which is already exhibiting several weeks of right translation.

The warning signs mentioned earlier have not gone away! The Fear and Greed Index pulled back a little, but is on the verge of crossing into "extreme greed" again. Breadth made a strong showing in the first two trading days of the new year, but it was short-lived and, for the past two days, it was mostly negative. The benefits of seasonality may already be exhausted.

Yesterday, 3 black crows flew in front of my car. Was this an omen? (Actually, they were ravens! :-))

Analysis

Daily chart

We must admit that the break-out to a new all-time high does not look very impressive! The index was rescued from continuing to decline by portfolio buying in the first two days of the year, and the channel breach only lasted one day. But since then, prices have not been able to pull away from the lower channel line. They must do so soon, or risk trading outside of it completely which, due to the current cyclical patterns, could lead to an immediate reversal.  A confirmed sell, for the short-term at least, would come if the recent low of 2234 were penetrated, and this would evolve into an intermediate downtrend if we dropped below the dashed lines representing support.

After already rising nearly 475 points without a serious correction, we may be overdue for a "normal" .382 retracement of that distance.  This would amount to a correction of 180 points, which sounds like a lot, until we take into account that several important cycles are due to make their lows around April/May.  It took 11 months (so far) for the uptrend to unfold. A rough calculation of dividing 4 months of correction into 11 months of rally gives us a time factor of .364 which is a good match for a .382 distance ratio. (Interesting speculation, which is all it is, and proves absolutely zilch!)

The sudden reversal of strength in breadth is evident in the A/D oscillator, at the bottom of the chart. The SRSI is already losing momentum! And the MACD, whose settings should provide more volatility than the normal ones, has not even been able to effectuate a bullish cross. When it turns down again and becomes negative, it will most likely give us a confirmed sell signal.

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

Hourly chart

Another wedge? That's what the break-out pattern looks like! It also ran into several trend lines when it reached 2282 and was a minor target provided by the last small accumulation phase. Combine that with a 15-day cycle high, and it's no wonder we turned down into the close -- new all-time high be damned!

In the last letter, I mentioned that we had developed some positive divergence in the oscillators which could lead to a bounce, but I had not expected to see it take us to a new high. At Friday's close, we had a reverse condition!  The MACD and A/Ds are very bearish, and although the SRSI made it all the way to the top of its range, it's reversal has already created a bearish cross.  If I did not have potential higher counts to 2300, I would call a top right here and now. Instead, I will give SPX the benefit of the doubt and another chance to go for the higher target.

An overview of some major indexes (Weekly charts)

The 4th week of consolidation has created a little more congestion at the top of the strong up-thrust which took place after the November elections.  The leadership appears to be shifting. QQQ (top right), instead of leading us to the downside, is playing catch-up while IWM (top center) and TRAN (bottom left) are taking over as the new potential doomsayers. Of course, both (especially TRAN) were the acknowledged prophets of the last major correction from January 2015 to January 2016, so I may have been betting on the wrong pony to take the lead this time. It will be worth keeping an eye on those two!

UUP (dollar ETF)

UUP could not quite reach its 27 target but came close, printing 26.83 in a final thrust before backing off immediately. This is a sign that it is probably done for now and should extend its correction for the next few weeks, although it may enter a period of distribution around this level, first.

GDX (Gold Miners ETF)

GDX sensed that the dollar was due for a correction and was quick to capitalize on it. It met its 18.50-19.00 projection, found ultimate support at 18.58 on December 20 and, last week, rose to 23.09 before beginning to consolidate.  Cycles may take it to a marginal new high (or at least a retest of the high) before the correction starts in earnest. The pull-back could then take the form of a base expansion, which is needed if it wants to challenge the recent high of 31.80. If the current base remains as is, it will be limited to a move up to 29.00.

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

USO (U.S. Oil Fund)

USO has met with resistance at the top of its channel once again. However, it may be creating a re-accumulation pattern above 11 before breaking through overhead resistance.

Summary:

Last week's call for the beginning of the intermediate correction turned out to be premature. Since then, the SPX has reluctantly made a new all-time high, but the DOW amusingly continues to refuse printing 20,000. A minor correction may take place next week before SPX has a go at the 2300 target, and the DOW finally allows the bated breathing bulls to resume their normal respiration pattern.

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

© 2005-2016 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

Catching a Falling Financial Knife