Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Stock Market Counter-trend Rally Reaches .618 Retracement - 13th Nov 18
How to Create the Best Website Content and Generate Organic Traffic - 13th Nov 18
Why the Stock Market Will Pullback, Rally, and Roll Into a Bear Market - 13th Nov 18
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18
Gold Asks: Are US Bonds Overvalued? - 11th Nov 18
Why the Stock Market Will Pullback Before Heading Higher - 11th Nov 18
GDX - Will you Buy This Hated Stock with Me? - 11th Nov 18
Christmas and Halloween LED Dynamic Projector Light Review - 11th Nov 18
Wall Street Veteran: Why I Don’t Lend to Family and Friends - 10th Nov 18
Stocks Breaking Higher, but Resistance Ahead - 10th Nov 18
Stock Market Was Supposed to “Crash Like 1987” - 10th Nov 18
SPX : The Incredibull Stock Market Plays On - 9th Nov 18
USD/CAD – The Moment of Truth Is Coming - 9th Nov 18
Is the Stock Market’s Rally “All Good To Go”? - 8th Nov 18
End in Sight for 'Unloved' Silver - 8th Nov 18
Outlook for Gold & Silver Precious Metals Sector is 'Positive' - 8th Nov 18
A Great Day for Metals as Platinum Price Breaks Out - 8th Nov 18
Future US Interest Rates, Financial Markets, and the FED - 8th Nov 18
Buying an Approved Used Land Rover From a Dealer - What You Need to Know! - 8th Nov 18
USD’s Weekly Breakout and the Gold Golden Spring - 7th Nov 18
Stocks Made a Post-crash Bounce. What’s Next? - 7th Nov 18
The Fourth Turning & War Of The Worlds - 7th Nov 18
The Economic Costs of Corruption in Philippines - 7th Nov 18
Stock Market Counter-trend Rally - 7th Nov 18
Britain's Unreliable Railways - Transpennine Express to Manchester Airport - 7th Nov 18
US Midterm Elections Forecast 2018 - 6th Nov 18
Stock Market’s Short term Outlook is Slightly Bearish, But Medium term is Bullish - 6th Nov 18
Financial Markets Are Making Faulty Assumptions about Growth & Resources - 6th Nov 18
Trump's War on the Fed - 6th Nov 18
Positive Implications for Gold Miners if Crude Oil Breaks Down - 6th Nov 18
Top Tips for Buying an Approved Used Land Rover from a Main Dealer - 6th Nov 18
What Every Investor Can Learn from Gamblers - 6th Nov 18
Is the Gold Bull Back? - 5th Nov 18
Gold Stocks Winter Rally - 5th Nov 18
The Cycle Saving Home Buyers $3,000 Per Year Just Ran Out Of Fuel - 5th Nov 18
Gold Stocks are Not Close to Bottom - 5th Nov 18
Stock Market Sharp Corrections and Bounces are Usually Followed by Retests - 5th Nov 18
London Dungeon Merlin Attraction Tourist Review - 5th Nov 18
Everything You Need to Know About Medicare in the United States - 5th Nov 18
Banking Stocks Index Signals Bank Failures - 4th Nov 18
IKEALand - New Theme Park Opens in Sheffield! - 4th Nov 18
London Eye Giant Ferris Wheel Ride Review - Top UK Tourist Attractions 2018 - 4th Nov 18
5 Major Factors Affecting the Direction of EUR/USD - 4th Nov 18

Market Oracle FREE Newsletter

Netflix Bulls and Bears Collide

Stock Market Uptrend Resuming?

Stock-Markets / Stock Markets 2018 Mar 11, 2018 - 06:21 PM 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 – The intermediate correction from 2872 could continue until mid-May, but is mostly behind us.

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

Uptrend Resuming?

 Market Overview

Last week, I wrote the following:

“When the rally from the 2533 low overcame the previous short-term high of 2727, it suggested that the SPX recovery could reach as high as the previous top of 2872, or even a little higher, before reversing.”

(For those of you who might have missed it, last week’s letter is available on “the Market Oracle” under “Authors Archives”.)

So far, the market is cooperating.  On Friday, spurred by a strong jobs report, SPX was up nearly 50 points, closing the week at 2786.  So we appear to be on track for the above forecast; but it could be truncated by some cycles which suggest that a consolidation should take place over the next few weeks.  Minor cycle lows are due next week, and larger ones around mid-April.  And then, the all-important 40-wk cycle is due in mid-May.  So the forecast made above could be altered by some corrective action before we get the all-clear signal for a new high. 

In addition, the rally which started on at 2660, on 3/02, is likely to pause around the former high of 2789 (which is now only three points away) or a little higher; especially since we have either filled or are approaching the maximum projection for this rally phase, and negative divergence has appeared on the hourly chart. 

On the positive side, the daily indicators have returned to a buy signal, so the bulls appear to be in control for the time being and may not be inclined to give back too much ground over the short-term. 

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

SPX daily chart

We have to admit that this is a pretty bullish-looking chart!  So why should we not expect prices to continue their upside progress right away?  For the reasons that have been stated above in the Market Overview

The secondary low of 2660 (3/02) now appears to be a high-level retest of the initial low of 2533 (2/09).  From a structural standpoint, it also appears to be the start of the next up-phase in the index.  Friday’s strong upside momentum is unlikely to stop on a dime, but carry a little higher into early next week before minor cycles take hold.  So there does not seem to be much in the way of further progress over the near term;  at best, a brief consolidation before we complete the rally phase which started at 2660 -- unless the cycles bottoming (ca.) mid-April have enough pull to cause a deep enough retracement which would prevent the index from making a new high before the pressure from the bottoming 40-wk cycle become dominant.

There is enough uncertainty about what the effects of the cycles bottoming over the next few weeks will be to prevent me from making a longer-term forecast until the larger cycle is out of the way.  We’ll just have to confine ourselves to a short-term analysis of the trend until mid-May. 

At the end of Friday’s session, the daily momentum indicators gave a confirmed buy signal by rising higher instead of dropping back, which had been a possibility with the index still contained below important resistance at the 2730-35 level.  However, the A/D indicator failed to make a new high and to give an all-clear signal.  So we’ll just have to see what happens next week. 

 

SPX hourly chart

Is the market strong, or is it just volatile?  That’s a good question!  It is very noticeable that segments A-B and A’-B’ are remarkably similar.  They both start at about the same price level, find initial resistance at the same level, and then move straight up above that resistance to about the same level.  Both denote a lot of strength (?) with an uninterrupted 85-point rally!  Of course, the similarity may end on Monday if the current move keeps on going.  For all that apparent strength, segment A-B came back down as fast as it went up, with an even larger decline!   So, are we about to experience the same market action?

Probably not!  An EWT analyst would point out that the A-B segment was most likely the 5th wave of a move that started at 2537, while A’-B’ is probably a 3rd wave from the 2647 low.  Maybe!  But what about the cycles that lie ahead, especially the 40-week cycle due only two months away?  It could produce a severe retracement in the market and mess up whatever pattern we assign to the current market action.  This is why I suggest that we confine ourselves to only trying to define the short term until it is out of the way.  Longer term, it’s fairly certain that we have not seen the top of the bull market, so we could reasonably expect a new high to be made after the 40-wk cycle has bottomed and propels prices back up after it reverses.

Over the near-term it’s also very likely that whether we go up only three more points on Monday, or 14 more, the current move is now on a short leash.  This is made fairly obvious by the negative divergence showing in the CCI along with a far less than super bullish performance in the A/Ds to support a 50-point move!  The NASDAQ 100 components that are included in SPX are responsible for the volatility of the index -- not the NYSE components. 

 

TRAN, IWM, SPX (daily charts)

The purpose of this section is not to analyze each index in great detail, but simply to compare the performance of the first two to the SPX’s to see if they support its current performance, or suggest that the latter is making an important top.  I think that last week’s action in IWM says it all for now, and we don’t have to elaborate; although we may want to keep an eye on TRAN which was forced to reluctantly joined the party on Friday.

UUP (dollar ETF)

UUP has pulled back to the support of the (green) 30-DMA and bounced.  A break of that support would at least re-test the former lows and be a factor in causing GDX to start a rally. 

GDX (Gold miners ETF)

Recently, the action of GDX has been closely tied to that of UUP, and GDX is closely watching for UUP to resume its downtrend.  This could come any day, even though the GDX 13-wk cycle low is still (ideally) a few days away.  Perhaps a start now, with acceleration a little later?

USO (United States Oil Fund)

USO is still correcting and may not be quite finished.  Even if it is not, no major correction is expected at this time.

Summary

SPX could end Friday’s strong rally on Monday and start a minor correction.  Cycles are, essentially, negatively biased until the middle of May, so the current structure is a little uncertain -- but will define itself over the next few days and weeks. 

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