Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17
These Two Articles Debunk The Biggest Financial Nonsense I See In The Media - 18th Sep 17
Bitcoin Price Crash 40% In 3 Days Underlining Gold’s Safe Haven Credentials - 18th Sep 17
The Sum of Risks – Global, Strategic, Political, and Financial - 18th Sep 17
The Netflix Of Canada’s Cannabis Boom - 18th Sep 17
Stock Market Sentiment Speaks: Either You Learn From The Events Of The Past Week, Or You Are Hopeless - 18th Sep 17
SPX 2500 … At Last! - 18th Sep 17
Inflation Lies, Lies and OMG More Lies - 18th Sep 17
How to Choose right Forex Trader? - 18th Sep 17
Who Has Shaped the World the Most? The Dozen Greatest Achievers - 17th Sep 17
Riding the ‘Slide’: Is This What the Next Stocks Bear Market Looks Like? - 17th Sep 17
Gold Up, Markets Fatigued As War Talk Boils Over - 17th Sep 17
Predicting the Future of the U.S. and the World - 16th Sep 17
Deceit in the Financial Food Chain - 16th Sep 17
Gold GLD ETF Investment Resuming - 16th Sep 17
Extreme Weather & Energy Markets: What's Next? - Video - 15th Sep 17
Trump’s Path to IP Wars - 15th Sep 17
GBP USD Approaches Fibonacci Target - 15th Sep 17
Higher US Interest Rates May Force Higher Inflation Rates - 15th Sep 17
Stock Market Investors: Taking the Road "Less Traveled" Has Its Perks - 15th Sep 17
The 3 Best P2P Lending Platforms For Investors In 2017—Detailed Analysis - 15th Sep 17
The US Debt Bubble Will Soon Warrant Serious Measures - 15th Sep 17
Why it is Often Difficult to Sell a House Fast - 15th Sep 17
S&P 500 At New Record High, Will It Break Above 2,500? - 14th Sep 17
Capital Market Trends - 14th Sep 17
Mike Maloney: The Top 10 Reasons I Own Gold and Silver - 14th Sep 17
The Only Real Europe is Greece - 14th Sep 17
7 Security Tips for Online Traders - 14th Sep 17

Market Oracle FREE Newsletter

5 Markets Ready to Move Before Year-End. Eexpert Analysis and New Trading Opportunities

Stock Market Keeps Us Guessing

Stock-Markets / Stock Market 2017 Sep 04, 2017 - 10:50 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long-term trend:  The uptrend should continue after pausing for a correction.

SPX Intermediate trend:  SPX could make a new high before continuing its correcting into October/November.


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

 

Keeping Us Guessing 

Market Overview:

Until last week, analysis was relatively simple:  SPX had made a top at 2491 which represented an intermediate peak.  Since we are now in the decennial pattern ending in 7, and approaching October, the most bearish possible historical period for the stock market, it is easy to assume that an intermediate correction is taking place with the next low in October/November.  The favored pattern for a correction is A-B-C, and we could count wave A as bottoming at 2427, with wave B now in progress headed for ???.  A likely possibility, based on the primary congestion pattern created between 2440-45, is 2480/85.  But if the count is taken across the entire pattern, it takes us up to 2505!  There is also another way to count the base which yields 2507.  So, with last week’s strength, the index has created enough uncertainty that we will have to let it tell us which of the two counts it wants to choose.  Whatever the result, continuing to correct into October/November is more than probable.  It’s only a question of whether the index will make a new high, first. 

As mentioned to subscribers, there is a 6-wk cycle bottoming early next week which should give us a minor correction.  The closing action on Friday suggested that the bottoming action had already started, and since the index waited until it printed 2480 to start correcting, it is going to make our analysis less complicated.  If, after this minor correction, we go to 2485 and turn down sharply, we can be fairly certain that the B-wave has ended.  However, if we keep going, then we will need to hold off and see if the second option is in play.  More than often, Fibonacci counts and P&F counts are nearly identical.  Since 2488 is the most “logical” extreme that can be attributed to the B-wave, that should be the red line in the sand (to use a cliché) for the B-wave. 

We’ll discuss what the indicators are saying in the chart analysis section.

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

  • Daily chart 
  •  
  • Last week’s strength has the bears fretting -- and for good reasons!  At the risk of showing my EWT ignorance, I believe there is no reason why, in a strong market, wave B cannot rise above the former top before reversing ias wave C, and this is what last week’s strength might imply.  In fact, while the logical length of wave “c” of B should be either 1.38 or 1.62 of wave “a”, (2480-2488), if it extended to a full 100% of wave “a”, that would take it to 2404!  And since that closely corresponds to the larger P&F counts I mentioned above, there are grounds to be concerned if you are short. 
  •  
  • This dove-tails into another reason to fret:  the daily momentum indicators had remained negative until last week, although the A/D oscillator had turned positive and remained positive during and after the bottoming of wave A, something I should not have ignored even though the momentum oscillators had remained negative. However, last week, they also turned positive.  So, in order to return to a neutral/negative stance in the indicators, we will have to get enough of a pull-back into early next week as the 6-wk cycle makes it low.  But in an uptrend, that cycle does not have an historical pattern of causing much weakness.  Nor is there very much congestion at the 2480 top.  In fact, there is precious little.  Based on that pattern, the most we might expect of this pull-back is 2465, while a .382 retracement of the entire rally could take us back down to 2460.  And we cannot even assume that either of these two targets will be reached. 
  •  
  • In any case, if we cannot develop a lot of weakness from 2480, we should look for a potential extension to 2485-88 when the rally resumes, with the likelihood of going even higher if SPX does not come to a screeching halt around those levels.
  •  
  •  
  • Hourly chart
  •  
  • The strength in the rally first made itself known when it went past its (red) 233 MA and kept going.  That occurred at the same time as it rose sharply above the top line of the light blue channel. If prices turn down from here, they will have formed a new, steeper channel which demonstrates the accelerated upside momentum.  And if they fail to fall back below the mid-channel line and the red MA immediately, it will be a sign of continued strength which will enhance the prospects for additional gains. 
  •  
  • Note also, that the oscillators have not yet given a sell signal, and if this pull-back fails to bring one this, added to the strength in the daily indicators will be another proof of continued market strength .
  •  
  • But when all is said and done, the real test is whether we can exceed the 2488 level.  We should know next week, but should not be too surprised at this strong showing.  After all, the 40-wk cycle only made its low about two weeks ago, and it could resist being pulled down into the “Fall” a bit longer!
  •  
  •  
  • An overview of some important indexes (daily charts)
  •  
  • All of the following indexes participated in the rally, but some more than others.  Notable for their reluctance to do so are XBD and TRAN (bottom left), both important leading indicators.  QQQ (bottom right) made a new high, but its P&F chart suggests that it may quit after touching 147.  And the DJIA (second from left, top row) was not as strong as SPX (first chart on the left, top row).  Overall, it is a mixed performance reflecting a lack of coherence which will require a little more time to see if the strong brings up the weak, or if the weak rein in the strong.
  •  
  •  
  • UUP (dollar ETF)
  •  
  • UUP must prove that it has found more than a temporary low.
  •  
  • GDX (Gold Miners ETF)
  •  
  • The gold miners are looking much more bullish since they were able to overcome resistance at 23.  They look as if they are ready to make a new intermediate high after pulling back into the cycle lows which are due around the middle of the month.
  •  
  • Note: GDX is now updated for subscribers throughout the day, along with SPX.
  •  
  • USO (United States Oil Fund)
  •  
  • USO has backed off a little more instead of rising to challenge its secondary downtrend line.  Since no divergence is showing in the oscillators, it may not be through with its correction. 
  •  
  • Summary
  •  
  • Next week SPX must decide if it ends its rally at the current level, goes a little higher first, or continues all the way to 2500+, which has remained an unfilled projection made long ago. 
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