Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17
The Bitcoin Bubble Explained in 4 Charts - 13th Nov 17
How the US Has Secretly Subsidized China to Produce Eco-Unfriendly Solar Panels - 13th Nov 17
The Increasingly Unstable Middle East Must Be On Every Investor’s Radar - 13th Nov 17
Stock Market Critical Supports are Being Challenged - 13th Nov 17
The One Chart All Investors Should See Before 2018 - 13th Nov 17
Short-Term Stock Market Uncertainty Following Recent Rally, Will Stocks Continue Higher? - 13th Nov 17
Is Hillary Just the “Fall Guy” for the Intel Agencies and their Moneybags Bosses? - 12th Nov 17
Stock Market Correction Phase - 12th Nov 17
Finally, The Fall Of The House Of Saud - 12th Nov 17
Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - 11th Nov 17
E-franc, E-krona... E-volution? - 11th Nov 17
Gold Investment Stalled - 11th Nov 17
Smart Ways to Get Loans Online - 11th Nov 17
What Can Pot Teach Us About Economics and Government? - 10th Nov 17
Can Stocks and Bonds go Down at the Same Time? - 10th Nov 17
Gold Market 2017 Will We See a Replay of 2015 and 2016? - 10th Nov 17
Oil markets turn bullish with shift to backwardation - 10th Nov 17
The Strange Behavior of Gold Investors from Monday to Thursday - 10th Nov 17
Where to Start Your Cryptocurrency Company - 10th Nov 17

Market Oracle FREE Newsletter

Forex Trading Free Week

A Shallow Stock Market Correction?

Stock-Markets / Stock Market 2017 May 15, 2017 - 03:14 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long-term trend:  Uptrend continues.

SPX Intermediate trend:  The correction from 2400 on 3/08 continues, possibly as the top of the B-wave.

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 Shallow Correction?

Market Overview

“SPX is poised to reach the high of the B-wave, perhaps by making it to the 2410 alternate projection…”

In fact, the high of the move came last Monday, falling short of 2410 by six points.  Whether or not this is the top of the B-wave remains to be seen.  In any case, the C-wave may turn out to be shallow.  The second intermediate cycle expected to bottom in this time frame came last week after a three-day decline of 22 points which was followed by an immediate reversal higher.  I had expected something deeper and more prolonged from this cycle, but the fact that this is the only weakness it could produce attests to the underlying market strength.  The third and final one is due at the end of the month.  Had these three intermediate cycles clustered more closely together, they might have given us a deeper correction. But they are spaced far enough apart to be fighting one another instead of cooperating. 

Erik Hadik has correctly identified a 17-year top occurring this year, but this is not a cycle which can produce much weakness until its declining phase is farther along.  He does speak of several other – even longer – cycles which are having an adverse effect on the market.  This could be; but, for the moment, at least, it does not look like a market which is quite ready to crash.

Analysis: (These Charts and subsequent ones courtesy of QCharts.com)

Daily chart

SPX made an initial high in early March and, after correcting down to 2322, it rallied to print a new high of 2403 last Monday.  An intermediate cycle (and several other minor bottoming cycles) should bring it back down by the end of the month/early June.  Between now and then, it’s not inconceivable that it could make a new high, and finally reach 2410.  If this new high turns out to be the elusive B-wave, then the C-wave low could be pushed back all the way into August and produce a decline more appropriate for this correction. 

The alternative would be that the C-wave is completed by early June in a very shallow correction which might not even breach 2380.  If that turns out to be the case, a new uptrend could start at that time which could next reach the low 2500’s.  Of course, this is speculative, but we must consider the various options. 
The market is playing it close to the vest right now and it will only lift one veil at a time.  More should be revealed next week.  The hourly indicators appear ready to forecast another minor uptrend starting on Monday.  We do not yet have a buy signal but it would make sense that the cycle bottoming last week should push prices a little higher, and there has been enough accumulation for a rally back to the recent high. 

The daily momentum oscillators reflect a slightly overbought market condition and they should continue to correct before they can get back into a buy signal mode.  If, as the 60-m chart suggests, we are ready to move a little higher, it will delay that process even more.

Hourly chart

After having a quick bounce from 2322 to 2398, the index has traded in a narrow range -- outlined on the chart by two heavy purple lines.  After making a high of 2304 (which was assumed to be the B-wave of the correction), an attempt at going through the low of that range and expanding into a full-blown C-wave failed when strong buying occurred at that low.  Since then, a small base has been formed, and this action has brought the oscillators to the verge of giving a buy signal.  If the quick decline/rally was in fact caused by a bottoming cycle, the odds favor a move to the upside from here.  The small base has the potential of taking the index back up to its recent high of 2403 and perhaps even higher.  However, another intermediate cycle low (along with two minor ones) due at the end of the month should prevent this move from being a genuine resumption of the long-term trend. 

The current (known) cyclical configuration may prevent wave-C from expanding to its full potential and confine the decline to a shallow correction.  If, however, there are (unknown) longer cycles influencing price action, then Wave-C could take the index down a hundred points or more, before it is complete.  A price break below 2380 would signal that this process is underway.

  • An overview of some important indexes (Weekly charts)
  •  
  • Last week, most of the following indexes went sideways, except for the the QQQ which, again, made a new high.  The oscillators of the other indexes suggest that they are in various stages of a corrective mode.  This is consistent with the current position of SPX.  It is a fair guess that QQQ will have to join them before we can resume the long-term uptrend.
  •  
  •  
  • UUP (dollar ETF)
  •  
  • UUP did find support where it should have and has rebounded in what should be the first phase of a more extended rally.  To prove that it still has many faithful followers, it will have to move out of its declining wedge pattern, and above the top trend line. 
  • .   
  •  
  •  
  • GDX (Gold Miners ETF)
  •  
  • GDX had a strong rebound after making an early cyclical low.  It has reached an area of resistance which should soon bring a correction.  We will have to see more follow-through strength before we can determine whether or not this is the beginning of an important move.  I doubt that it is for the simple reason that the P&F chart needs to do some backing and filling before a base has been established.
  •  
  • Note: GDX is now updated for subscribers throughout the day, along with SPX.
  •  
  • USO (U.S. Oil Fund)
  •  
  • USO has found support on its lower channel line and bounced.  It may have to do more consolidation below the trend lines that it just broke, before it can rise above them again.  In any case, it has reverted to another intermediate corrective channel and should not be of interest to bulls until it shows signs of wanting to break out of it. 
  •  
  • Summary:
  •  
  • SPX continues to correct, but the nature of that correction is still unclear.  We could be ready for a resumption of the uptrend after only a couple of weeks.  However, if we fail to do so, we could be extending the time factor until a more substantial decline of a hundred points or more has taken place.  
A decline of this magnitude would be more appropriate to the structural correction taking place.

Andre

For a FREE 4-week trial, send an email to anvi1962@cableone.net, or go to www.marketurningpoints.com and click on "subscribe". There, you will also find subscription options, payment plans, weekly newsletters, and general information. By clicking on "Free Newsletter" you can get a preview of the latest newsletter which is normally posted on Sunday afternoon (unless it happens to be a 3-day weekend, in which case it could be posted on Monday).

 

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

© 2005-2017 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