Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
WAYS TO SECURE YOUR FINANCIAL FUTURE - 20th Aug 19
Holiday Nightmares - Your Caravan is Missing! - 20th Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Stock Market Still Strong!

Stock-Markets / Stock Markets 2018 Jan 29, 2018 - 07:01 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – The bull market is continuing with a top expected in the low 3000s.
 
 Intermediate trend –  A new surge  of buying has moved ahead the forecast for an intermediate term top.

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 Strong!

Market Overview

I have seriously underestimated the extent of the uptrend which started with the low of the 7-year cycle at 1810.  I was looking for a phase count to take us to a 2660 top, but that turned out to be a short-term stop with SPX only pausing briefly at the end of 2017 and, re-invigorated by the tax bill, it shot up another 200 points in less than a month.  An eventual move to the low 3000s had been anticipated and posted under “Long-term trend”, (above), but I did not expect it to be approximated this quickly.  In spite of its near exponential trajectory, SPX appears to be building the normal staircase pattern to its next significant projection target.  This means that driven by minor cycles, the index forms a re-accumulation pattern which gives us a good idea of what level will be reached at the next minor cycle high, and this process is repeated until it nears the next important price projection, begins to break uptrend lines and eventually reverses its trend.  

Currently, we are coming to the end of such a process.  Last Wednesday, SPX started to build a new base after the minor cycle made its low, and it rapidly formed an impressive re-accumulation pattern which ended late Thursday with the start of a new short-term uptrend that has quickly reached the vicinity of the new price target (given in Thursday’s Market Summary).  Friday’s close fell a little shy of the stated projection but it is expected to be filled on Monday Morning.  A minor reversal should then take us to the next cycle low ideally due on Tuesday.  This is expected to be a very short correction following the partial completion of the total base count.  The next upside target will be included in Monday morning’s update. 

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

SPX daily chart

About two months ago, expecting SPX to top at about 2700, I mentioned that we would have a confirmed reversal when trend line #1 was broken.  At the end of December, the trend line was tested, held, and instead of giving a sell signal, the index started an accelerated rally away from the trend line.  This has brought the price above several top channel lines which should have contained prices – and there are higher projections directly ahead!  It’s clear that SPX has a definite objective in mind for this intermediate top .  After doing a thorough review of the 1810 base on the long-term P&F chart, I have a better idea of what it should be.  Only minor cycles lie ahead for the immediate future, and SPX is taking advantage of this favorable cyclic condition to reach its objective before a more important cycle threatens to reverse it course.

If you look at the chart below, you will see that a new trend line has formed which is much steeper than trend line #1.  This is obviously the one on which we must focus for an indication that we are near the top.  But a break of this trend line will probably not yet signal the beginning of the expected intermediate correction.  After it is broken, another will form at a less steep angle, and this process may have to be repeated once or twice more before we are in a position to break trend line #1 and to – finally –  start an intermediate downtrend.

One thing that I have found misleading has been the behavior of the breadth index.  I have never seen it show such a lack of support for prices for this length of time!  If you look at the lowest oscillator, you will understand why I say this.  It has been showing relative weakness to the price chart for a long period of time; once again proving the old adage that “Price is King”!

SPX hourly chart:

I have often mentioned some of the advantages of the P&F charts over bar charts.  Here we have a good  example of this!  I have highlighted in green two consolidation patterns.  The one on the left  took two weeks to form.  The one on the right, a day and a half.  And yet, when converted into P&F charts, they are almost equal in length; which means that they have nearly the same projection count.  One could not realize this simply by looking at the bar chart.  We will compare the length of the two uptrends next week after the one on the right has been fully extended. 

On the hourly chart, we can see that the newly formed, steeper trendline has five contact points, making it a very valid trend line, and warning us to pay attention when it is broken.  It also has five touch points on its top channel line; plus one which went above it about half way through the trend.  This gives us some good parameters to follow for each short-term move.  The one currently underway is close to the preferred top channel line.  If we did not know that the next minor cycle low is due on Tuesday and that the move has almost reached its initial target, we could still expect some resistance to occur slightly above Friday’s close which has the potential of turning the price back down. 

On Thursday, the CCI dipped slightly into the red, but since it reversed immediately and had a good thrust into the green instead of giving a sell signal, it told us that the correction ended.  The bottom indicator (A-D plot) shows that the pattern of selling into first hour strength (which has been taking place for over a month) continues.  I thought that it was an indication that large holders were selling into the opening strength in expectation of having reached the proximity of an important top, but the market action has nullified this hypothesis.

An overview of some important indexes (daily charts)

Last week, Apple was out of sync with the rest of the FAANGs, but until they all stop making new highs and show a propensity for correcting, it‘s likely that we are not yet ready for a significant market correction. 
There was a little more uniformity in the lower tier with all four indexes failing to make new highs, but with the market expected to push higher next week, this may be only a head fake.

UUP (dollar ETF)

Last week, UUP was buffeted by comments from the treasury secretary -- who prefers a weak dollar -- and the president -- who now likes a strong dollar.  The net result was that the dollar ended significantly lower probably on its way to eventually re-test the 2011 low. 

GDX (Gold miners ETF)

With the dollar taking a plunge, GDX made a new high but obediently stopped at a former resistance level.  With its 6-wk cycle low due in just a few more days, it is likely that the current pull-back will continue until then.

USO (United States Oil Fund)

USO is most likely ready for a minor pull-back, after which it should push at least to 14.50-15 before undertaking a more protracted consolidation.  Longer-term, 18-21 is not unconceivable and probably likely.

Summary

A new pattern of re-accumulation has formed which projects higher prices over the 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

© 2005-2019 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