Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
Why Oil Prices Fell -- Stockpiles or Price Pattern? - 18th Aug 18
Why The Uranium Price Must Go Up - 18th Aug 18
Land Rover Discovery Sport 90% Motorway Driving MPG Fuel Economy in ECO Mode - 18th Aug 18
GDX Gold Mining Stocks Q2’18 Fundamentals - 18th Aug 18
SPX Losing Gains - 17th Aug 18
What Gold Is Not - 17th Aug 18
Dollargeddon - Gold Price to Soar Above $6,000 - 16th Aug 18
Stock Market Higher Again, Correction Over? - 16th Aug 18
Up Your Forex Trading Game - 16th Aug 18
Large Caps Underperformance vs. Small Caps is Bullish for Stocks - 16th Aug 18
“The Big Grab” - Failing Pension and Retirement System - 16th Aug 18
How US Indo-Pacific Vision Forgot Asian Development - 16th Aug 18
Impulse Moves in the Currencies - 15th Aug 19
Best Merlin UK Theme Park Summer Holiday 2018 - Thorpe, Alton Towers, LegoLand or Chessington? - 15th Aug 18
The Essence of Writing an Essay that Must be Understood - 15th Aug 19
Is Solar Energy Rising From The Ashes Again? - 15th Aug 18
A Bullish Bond Argument That Hides in Plain Sight - 15th Aug 18
Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - 15th Aug 19
A Depressed Economy And A Silver Boom - 15th Aug 19
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

Stock Market Ideal Cycle Low Near

Stock-Markets / Stock Markets 2018 May 21, 2018 - 06:10 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 is likely to continue until about early June.

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

Ideal Cycle Low Near

Market Overview   

Ever since the beginning of the correction, I thought that it might not be over until the 40-week cycle had bottomed.  Of course, I did not know how exactly this would end.  As of now, it looks as if it will be with the completion of a symmetrical triangle, but this is only an assumption which remains to be proven correct.  The low should still be ahead of us but, as I mentioned in the last letter, there is an outside chance that this intermediate cycle might have made its low on 5/03, at 2554.  If so, that date will turn out to be that of the final e-wave of the triangle.  The alternative is that we have just now started the final leg of that formation.

I had originally estimated the low to be on 5/21, but later felt that a better fit would be the beginning of June.   Minor cycles call for a low either Monday or Tuesday.  If the rebound from that low is muted, we should continue to have another week or so of price weakness before a new uptrend can get under way.  Let’s see how it plays out!             

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

SPX daily chart

The rally from 2595 peaked on Monday and the index started a pull-back which was fast and steep.  This was followed by a two-day rebound which fell 10 points short of Monday’s high and gave up 50% of its daily range by the close.  Friday was another down day, which had been anticipated because a minor cycle was bottoming on that day.  Because another, slightly longer, minor cycle is due early next week, we waited to see how much of a rally Friday would bring!  It was only a one-hour affair and the index drifted for the rest of the session. 

This action almost ensures more weakness early in the week.  If so, and we drop below 2700, we could see a 20-pt drop before finding support.  Assuming that we get down to about 2680, this would be an approximate .382 retracement of the rally from 2595, and it would also find support at the blue 55-DMA.  That would constitute a perfectly normal correction of that rally, and if we see some good strength returning to the market after this, there is a good chance that the correction did end on 5/03.  For the 40-wk cycle to still push ahead to early June, we would need to see another weak rebound, followed by more weakness by the end of the week. 

The daily indicators turned down last week, suggesting that more corrective action should continue into next week, but they are still positive. Only if they turn negative will they suggest that the correction could continue for a while longer.

SPX hourly chart

Thursday and Friday did not bring that much weakness to the correction from 2595 – as we can plainly see in the  A/Ds (bottom oscillator) which remained essentially positive -- but it was enough to generate a sell signal in the momentum indicators which remained in effect until the close. 

We are at the point where we need to keep track of the market action on a daily basis to determine how the market will end its correction, but let’s keep in mind that if the ideal time frame is observed, we still have about two weeks of potential twists and turns before we can reverse the intermediate trend.  Next week and the following one should bring more clarification in order to be crystal clear. 


SPX, IWM, TRAN (daily charts) 
IWM is taking its function of leading indicator seriously!  It has already made an all-time high.  But in the process, it has become overextended, has developed some negative divergence in the CCI, and may have filled a short-term P&F projection.  This is suggestive of an imminent pull-back.  Besides, the TRAN is telling it:  “cool it!  I’m not ready.”

 
UUP (dollar ETF) Weekly

UUP may have completed its move from late March.  A structure of 5 waves is visible, and the last wave is about the same length as the first.  Furthermore, negative divergence is showing in the indicators.  This is consistent with the end of a short-term trend and, if correct, should bring a price reversal imminently.
 

GDX (Gold miners ETF)

There is good evidence that GDX has made an 11-wk cycle low (if not on Friday, then any day now).  Since GDX and UUP have formed synchronized countertrends lately, the above analysis of UUP would appear to confirm that of GDX.  If so, GDX is ready to rally, but this will be limited by the 26-wk cycle low which is due in about three weeks.  

USO (United States Oil Fund)

USO has now met its near-term target of 14.50-1500.  Although it could still push just a little higher, the negative divergence which is appearing in the indicators warns us that the beginning of a correction is near.

Summary  

We are about to find out if the low of the 40-week cycle, which has been estimated to be in about two weeks, is accurate.  For this to be correct, we will need to see additional weakness directly ahead.  A near-term resumption of the rally which started at 2595 would nullify this analysis.

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