Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

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

© 2005-2018 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