Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

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