Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market More to Go

Stock-Markets / Stock Market 2017 Jul 17, 2017 - 05:03 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long-term trend:  Uptrend continues with a serious loss of upside momentum in weekly indicators.

SPX Intermediate trend:  An ending diagonal appears to be in its last stage of completion .

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

 

More to Go!

Market Overview

SPX has met the expectations outlined in the last letter, and more bullish action is expected since last week’s action has all the markings of an impulse wave which appears to be on target to reach our 2500 projection.  I say “appears”, because in these late stages, traders may not wait till the last minute to take profits, and this may shorten the full extent of the projection. 

With the current structure subdividing, we could go a little higher before the index settles into a minor consolidation.  The first wave of the diagonal lasted about a month and the second a few days more.  If the current one takes that long to complete, it will put us about two weeks away from the 20-wk cycle low which is due around August 15, and result in a very sharp and extended decline into that date.   

As we move forward, we should be able to become more and more specific about the final high of the rally in terms of both time and price.

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

Daily chart

Wave 4 of the diagonal found support just above the 2400 level.  You can see why on the chart!  It’s a strong support level resulting from the top of the previous uptrend at 2400, and that of the first wave of the ending diagonal.  We could have retraced to 2380 without endangering the curren structure, but the fact that we remained above 2400 is a sign of strength and this is why it is not unrealistic to think that SPX has a reasonable chance to reach its fulll objective of 2500. 

Another sign of strength comes from the gap opening last Wednesday.  This was atributed to Janet Yellen’s remarks during her report to congress,  and showed that traders still expected additional price appreciation.  The index did stall on Thursday in the face of severe overhead resistance, but it blasted through it to a new all-time high on Friday.  Over the last few days, SPX had some help from a good rally in the tech stocks, although they remain under their former highs.  But since the DJIA and NYA also made new all-time highs, it’s obvious that there is still plenty of strength in the overall market.  Of course, if my analysis is correct, we might feel differently a couple of months from now! 

Besides the fact that the market appears to be structurally ripe for a significant correction, we should be aware of the fact that history tells us that the seventh year of the decennial pattern is prone to market weakness.  We are halfway through 2017 and the market is still making new highs.  It’s very posssible that during the last two weeks of the 20-wk cycle the trigger will be pulled for a decline of some 200 points that could last until October, or even a little later -- especially since a 40-month cycle (ca) is conveniently due to bottom around that time.

You might think that it does not make sense for the market to make an all-time high so close to the bottom of a 40-month cycle, but in 1987 (also a year ending in 7) it made its top only nine weeks before its October (take notice) low, causing SPX to lose a third of its value -- most of it in the final three weeks!  Now, that’s what you’d call a black swan event!

If realized, our expected decline of about 200 points would pale by comparison, but it could still smart if you are not prepared.

  • Hourly chart
  •  
  • The mid-channel line (dashed blue) was tested three times and held before the index finally broke out of its red downtrend line and corrective channel, which led to a strong push to a new high.  The break-out gap occurred when the Fed chair released her report on Wednesday morning, and the index has not looked back since.
  •  
  • It has, however, become short-term overbought with some negative divergence appearing in the oscillators, and price has reached the top of a large, flat channel which may do more than cause the small reversal which occurred on Friday.  However, the trend has reached the top of the blue channel which outlines wave 3 of the 5th wave without showing deceleration.  This suggests that more headway could be made before we have a reversal which puts an end to this wave and creates a corrective channel which takes the index outside of the blue channel for wave 4, prior to the final push into the target area. 
  •  
  • Only until after that final wave 5 of the 5th wave of the ending diagonal, can we expect to see the beginning of a sharp decline into the 20-wk cycle which, in turn, should trigger a larger decline into October.  Any deviation from this ideal scenario will be addressed if and when it occurs.
  •  
  • An overview of some important indexes (daily charts)
  •  
  • There is no need for an in-depth analysis this week, since it would not add to our perspective on the market.  Let’s just note that three indexes made new highs last week:  NYA, DJIA and TRAN.  The other three did not (IWM, QQQ and XBD).
  •  
  • UUP (dollar ETF)
  •  
  • The dollar has not found the low of its correction yet, which makes the 24.50 P&F target for UUP looking more and more likely to be filled.  Only 12 cents to go!
  •  
  •  
  • GDX (gold miners ETF)
  •  
  • GDX has not responded well to the low of its weekly cycle.  Larger cycles are obviously in charge.  It is
  • worth noting that the rally of January 2016 may not have been impulsive, especially since it retraced slightly less than .382 of the former, substantial decline.  This could mean that the intermediate correction from the high may not be complete. 
  •  
  • For the near-term, the current decline may not be complete either and GDX could return to about 20 before it is ready for a reversal.
  •  
  •  
  • Note: GDX is now updated for subscribers throughout the day, along with SPX.
  •  
  • USO (United States Oil Fund)
  •  
  • USO is looking just a little better technically and could extend its current bounce to the first downtrend line. 
  • Summary
  •  
  • “There is some evidence – which will need to be confirmed next week – that SPX is getting ready to start the final wave of its terminal pattern, and that this could take it to about 2500 before we can start the long-awaited intermediate correction.”
  •  
  • It’s fair to say that we did get that confirmation last week with the index making a new all-time high.  For now, prospects to reach our final projection of 2500 appear reasonable, but a consolidation is due near-term.

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

© 2005-2022 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