Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18
The Value of Bitcoin - 11th Jul 18
America a Nation Built on Lies - 11th Jul 18
China, Asia and Emerging Markets Could Result In Chaos - 11th Jul 18
Bullish Gold Markets in the Big Picture? - 11th Jul 18
A Public Bank for Los Angeles? City Council Puts It to the Voters - 11th Jul 18
Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - 11th Jul 18
Argentina Should Scrap the Peso and Dollarize - 11th Jul 18
Can the Stock Market Close Higher For a Record 10th Year in a Row? - 11th Jul 18
Why Life Insurance Is A Must In Financial Planning - 9th Jul 18
Crude Oil Possibly Setting Up For A Big Downside Move - 9th Jul 18
BREAKING: New Tech Just Unlocked A Trillion Barrels Of Oil - 9th Jul 18
How Trade Wars Penalize Asian Currencies - 9th Jul 18
Another Stock Market Drop Next Week? - 9th Jul 18
Are the Stock Market Bulls Starting to Run? - 9th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Stock Market Still Bullish, (Near-Term)!

Stock-Markets / Stock Market 2017 Nov 06, 2017 - 06:09 AM GMT

By: Andre_Gratian

Stock-Markets

Current position of the market

SPX: Long-term trend – The bull market is continuing with no sign of a major top in sight.
 
 Intermediate trend –  Soon coming to an end.

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 discusses the course of 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 ajg@cybertrails.com

Still Bullish, (Near-Term)!

Market Overview

Chart Analysis  (These charts and subsequent ones courtesy of QCharts)

This is some bull market, huh?  And it does not look like it will give up the ghost anytime soon!  The probable cause of this strength will be discussed later, but for now, there are good reasons to think that it is approaching a significant correction; so this is the time for the bulls to exercise some caution as the upside potential appears to be limited.  However, it won’t happen next week.  For now, it looks as if we need to go a little higher before we make another short-term top.  And the next correction may not be ‘it’, either. 

The weekly indicators are still too strong for anything really serious to take place right away.  The weekly chart of the SPX  shows no sign of long-term deceleration and, for that matter, nor does the daily.  The 1X Point & Figure chart is showing some congestion, but we need to see more on the 10X in order to ensure a decline of consequence.  This could happen over the next two or three weeks since we are nearing a short-term top which should be followed by a short-term correction and by another rally  -- a process that could add enough Xs and 0s to the 10X chart to form a top capable of producing a decline of a hundred-plus points. 

SPX daily chart:

The 1810 low of January 2016 was most likely caused by the 7-year cycle which also bottomed in March 2009.  But its effect on the market could not have provided a bigger contrast.  Obviously a larger cycle (perhaps 40-yr)  was also involved which produced the kind of weakness that we saw in the last bear market.  This is the only factor that could be the cause of the strength that we now see in the market.  This is why we should not expect a major top to come anytime soon.  Also, if the 7-year cycle did make its low two years ago, we should not expect an important top to occur for at least another year or even more.  With the 7-year cycle still in its adolescence, we can also understand why the 40-week cycle which made its low in August had such a small impact on prices, and why it is still pushing us higher and higher.  It, too, is still early in its phase

The chart, below, is not showing much deceleration.  Nowhere is this more evident than on the top oscillator (CCI) which has been a solid green ever since the cycle turned up.  Before we can have a good correction, it will have to drop into the red. But it’s very high and, although it is showing some negative divergence, it does not look not as if it is not ready to do so right away.  The original price trend line was very steep and was broken only briefly, readjusting to another one also steep. 

There is a minor cycle due to make its low early next week which could bring a pull-back of a few points followed by a new high.  After that, there is a six-week cycle due to bottom towards the end of the month.  Probably not until after its reversal should we expect to get a larger top.  There are some important cycles due in the middle of January which should give us a correction on a par with that of the 40-week cycle and by that time, we will have accumulated enough distribution on the 10X chart to nurture a significant downtrend.

SPX hourly chart:

On Friday, SPX nearly matched the previous high -- only coming a few pennies short.  Since there is a 10-day cycle low due on Tuesday, it’s likely that we will pull-back for a couple of days before making a slightly newer high.  The pattern we are making looks very much like an ending diagonal which would be complete on the next small up-move.  If it is an ending diagonal, the next short-term correction could take us back to the point from which it originated, around 2545.  After the next rally we should finally be ready for a more important pause in this uptrend which could bring about a correction of a hundred points or more.  A more accurate count will be available after we have made our final top and take a measurement of the distribution pattern. 

Toward the end of the day on Friday, it looked very much as if we were preparing to reverse into the minor cycle low.  In spite of a 12-point rally, the A/Ds started the day negative and remained negative throughout the entire treading session..  The move in the SPX was largely the result of a strong tech sector.  It peaked a couple of hours before the close and underwent a little distribution until the closing bell. 

An overview of some important indexes (daily charts)

The lower tier – except for QQQ – is suggesting that a correction is coming.  QQQ responded to the recent strength in the tech sector which led the market higher last week.  We may be starting to differentiate between the leaders and the followers. 

UUP (dollar ETF)

UUP has completely come out of its corrective channel and, after a brief consolidation, is getting ready to move past its last downtrend line.  The break-out wave looks valid and the index should move higher.  A move up to its 233-day MA would represent a 50% retracement of its recent decline and looks like an attainable goal for now.


GDX (ETF for gold)

GDX moved down to its ideal time frame for the low of the 6-wk cycle and turned up on Friday.  If it continues higher, this will be confirmed as a genuine reversal and we should see higher prices before it is  pulled back down by the next bottoming 9-10 week cycle.

USO (United States Oil Fund)

USO has made an impressive recovery since its June low.  However, it is coming up to the top trend line of its primary corrective channel and, even if  it goes through it, it will face more resistance from its previous short-term highs. If this is a genuine trend reversal, more consolidation should be expected before it can overcome the 12.50 high.

Summary

SPX is three to four weeks away from an intermediate top.  A few minor reversals to build an adequate distribution phase on the P&F chart will first be required. 

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

© 2005-2018 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