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
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

Stock Market Still Range Bound

Stock-Markets / Stock Markets 2018 May 07, 2018 - 10:30 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 – The intermediate correction from 2873 should continue until about mid-May.

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 Range Bound

Market Overview   

SPX started an intermediate correction on 1/29 which should continue to correct for another couple of weeks.  From a high of 2873, the initial drop of 340 points to 2533 on 2/09 was followed by a rally to 2777 on 3/13, another drop to 4/02, and another rally to 4/18, before reversing again.  By then, the sequence of  higher lows and lower highs began to look like a contracting triangle in the making.  However, this pattern could soon be morphing into something else, so we need to let it complete before labeling it.

The time frame to end this correction is best relegated to the low of a 40-week cycle which is due probably shortly after mid-May.  The final price low is unclear at this time, since there are two counts which could turn out to be valid.  A new low could be made, or simply a re-test of the low.  The original projection to about 2450 is looking less and less likely.

The 20-wk and 40-wk cycles are as reliable as cycles can be when it comes to deciding on the ideal time frame for their lows.  Furthermore, the weekly chart oscillators are a good source of confirming data.  These currently tell us that we are  approaching completion, but are not quite there yet.

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

SPX daily chart

Last week, I mentioned that price action on the downside had basically been contained by the 200-DMA and recently, by the 55-DMA on the upside.  Last Thursday SPX dipped below the 200-DMA for the second time since its 2533 low but, once again, was not able to close below it and rallied sharply on Friday.  Also last week, I drew a support zone on the chart represented by two parallel red dashed lines which again proved valid with Thursday’s low finding support on the upper parallel.  While these factors have contained previous declines, it is possible that they will prove unable to resist the downward pressure of the final thrust of the 40-wk cycle as it makes its low. 

Since the early April low of 2554, the rallies have not been able to reach the primary downtrend line and their tops have formed a secondary downtrend line which has contained prices on three separate occasions.  Friday’s strong two-day rebound of 76 points stopped just below it, and the index pulled back eleven points in the last hour.  There is a fair chance that the rally from 2695 on Thursday has already topped, but since minor cycle lows are still two or three days away, we could see a little more distribution in this area before rolling over.

It is not clear just how low the final down-thrust of the 40-wk cycle will take us, but this should become more evident after this minor top has given us a reversal, and this information will be passed on to subscribers as soon as it becomes available.

 

SPX hourly chart

When SPX rallied above 2675, it gave hope to the bulls that the correction was over and that the index was on its way to a new high; but it did not stay there long and soon retraced back toward the previous lows. So far, it has found buyers just below 2600; but if the 40-wk cycle still has a couple of weeks to run before bottoming, the odds are pretty good that  the final low will be closer to 2553.  That will depend on whether the intermediate cycle ends in a climactic flourish, or just a whimper.  The next two weeks should give us a little more insight into the shape of the final decline.

There was a strong rally after Thursday’s sharp dip to 2595.  I believe that the 45-td cycle was responsible for that low.  A similar low has taken place at regular intervals in the past, but it has not caused that much of a ripple unless it was associated with a larger cycle.  In this case, it was the 40-wk which added downward pressure. 

SPX vs. INDU (daily charts)

At the beginning of the correction, SPX (left) and the DJIA were in sync.  On the first rally from the low, DJIA started to diverge negatively from SPX (*) and this continued with the next low.  Now, DJIA has gotten back in sync with SPX.  The implication is that when INDU was diverging, it was likely that the correction had farther to go.  Now, both indexes being in sync tells us that the end of the correction is near.

UUP (dollar ETF) Weekly

UUP has had a good run over the past three weeks, but it is close to being over.  The price has reached an overhead resistance level which is going to stop its advance, and this is being confirmed by the indicators which have developed increasing negative divergence.  A retracement should find support at 24.00 and, if it continues, at about 23.75.

GDX (Gold miners ETF)

Ever since it ended its correction in February, GDX has been engaged in a measured uptrend which, nevertheless, has bullish implications.  This inaction has almost put us to sleep, but we should be wide awake now, because the next time GDX challenges the initial February high of 23.15, it is likely to break-out and quickly run up to about 25.50, and perhaps higher.  GDX has most likely been waiting for UUP to stop its advance and to start correcting which, as stated above, appears to be imminent.

USO (United States Oil Fund)

USO is still bullish and is most likely reaching for its 14.50-15 short-term projection before starting to correct.  That correction could take it back to about 11.50-12.00.

Summary  

SPX is approaching the end of its correction which is deemed to be in about two weeks.  There are two possible targets for the final low: one which would slightly exceed the former low of 1553, and the other which would find support at a higher level. 

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