Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Counter-trend Still on Track

Stock-Markets / Stock Markets 2019 Jan 06, 2019 - 05:01 PM GMT

By: Andre_Gratian

Stock-Markets

SPX: Long-term trend – Correcting within the very long-term bull market trend.

Intermediate trend – A bearish correction has started which could retrace as low as 2200 before it is complete

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

Counter-trend Still on Track

Market Overview

On Thursday of last week SPX was down 62 points.  On Friday it was up 84.  This market is not for the faint-hearted!  Daily moves of 700 points or more are becoming common place for the DJIA.  But you might as well get used to it because it shows no sign of abetting, and more of the same is predicted for 2019.  Great for traders who are on the right side of the trade!  Volatility aside, the index is doing what it is supposed to do, which is rallying in the primary downtrend that started three months ago when SPX was at 2941. 

Since the 2346 low of 12/26, what is construed to be a bear market rally has already tacked on 184 points and, after Friday’s performance, is likely not done, yet.  As I have mentioned before, the extent of counter-trend rallies or declines can be estimated using Point & Figure counts and Fibonacci ratios.  The initial move after the recent low carried the index to a high of 2520 (which is what the P&F count had been estimated to be) before a 3-day correction occurred, whereby a .382 retracement of the decline from 2800 was 2516.  Can’t do much better than that!

On Friday, the index reached 2538 during its fourth hour of trading and consolidated between that high and 2522 during the rest of the session.  Undoubtedly, the proximity of the February low of 2532.69  was deemed to be a good place to take profits after a daily move of 80 points.  The question is whether the index spends some time consolidating in this area, or moves on right away.  We’ll know Monday!  If the rally does extend before coming to an end, a 50% retracement would take prices to about 2575, and one of .618 to 2528.  These levels, should they be reached over the short-term, would be a good place to anticipate an end to the rally and perhaps a resumption of the primary trend.  However, while the bear market is expected to continue, when and exactly how much lower are still open questions.

Chart Analysis  (The charts that are shown below are courtesy of QCharts)

SPX daily chart 

Friday’s move took the index 18 points higher than the initial high of 2520, to the vicinity of the February low which created some resistance.  But with prices holding up into the close with little retracement, we should assume that the move is not over and that it could carry up to the next resistance band which has been marked on the chart.  In fact, at a .618 retracement to about 2625, it would reach the top of the resistance area as well as the bottom trend line of the original topping channel (pink).  In addition, by the time we get there, the blue 50-dma will most likely have extended lower to that general level and will add increased resistance potential. 

Whether we stop at the 2575 level or go on to 2625, there are P&F patterns already in place to support both of these projections, so either one is a possibility.  If we did continue higher, it would mean one of two things:  1) we could be retracing the full distance from the 2941 top instead of that from 2800, or 2) we have already put an end to the correction and are in the process of extending the major trend from March 2009 -- although this option carries a very low probability factor.  In any case, the resistance at the 2625 level will be formidable and, if/when we get there, some heavy selling should take place and we’ll have plenty of time to assess the market’s position and its next move.

As of now, the oscillators are all in an uptrend, and even though the CCI is not yet in the green, it would not take much more follow-through to put it there.  If we make it to the 2575 target, the oscillator patterns should tell us if this is the end of the move or if we are likely to push ahead to the next one. 

SPX hourly chart

The correction down from 2800 was contained in a channel which was broken on the downside in the last climactic move to the 2346 low.  The rally took the index outside of its channel before consolidating after reaching a .382 retracement of the downtrend.  During this consolidation, the top channel line served as support on three separate occasions with the last back test being on Thursday.  Friday’s uptrend started with a large gap and continued until it had made a new high before some consolidation appeared.

As mentioned above, the February low -- as well as the pattern formation in the middle of the chart -- provided some resistance to a move which was over-extended after nearly 90 points without a correction.  This could cause more of a near-term retracement than was already experienced during the second half of Friday’s trading session.  In addition, while price overcame the former short-term high, the top oscillator (CCI) formed some negative divergence.  This does not necessarily have to result in additional consolidation, but it does make it likely that more of a pull-back could take place before the rally continues. 

DJIA, SPX, IWM, NDX (daily)

All four indices have started a new uptrend with IWM again leading the other three.  It was not affected by the sharp drop in Apple on Thursday and held up better than the others, consequently out-performing them on Friday as well.  The indicators are confirming the extension of the rally from the December low.  All four indexes were stopped by the 13-dma initially, but on Friday they all made a new short-term high, closing well above it.  Even if there should first be a little pull-back, it looks as if we have registered a solid reversal with higher prices ahead.

UUP (Dollar ETF)

The weekly chart of the index clearly shows that UUP has run into resistance and has begun to roll over.  Besides breaking its uptrend line of one year, it has closed two consecutive weeks below its 13-wk MA -- both times on the low of the week.  This suggests lower prices ahead with perhaps a brief hold at the mid-channel line (about 25.25) before pushing lower to the 200-wk MA which should provide better and longer support.  The lower oscillator has already given a strong sell signal, and it’s just a matter of time before the upper one confirms by dropping into the red.

GDX (Gold miners ETF) weekly

Comparing the weekly charts of UUP and GDX shows that one can carry their reverse synchronicity just so far.  GDX made its low before UUP made its high, and this results in a more bullish chart for GDX than UUP’s.  This is also reflected in the oscillators, with both oscillators of GDX being more advanced.  And the 50-wk and 200-wk MA of GDX are both on the verge of being overcome.  All of this creates a bullish picture for GDX and, although it has some overhead resistance to overcome over the short-term, it should be able to move through it without too much difficulty since cycles are favorable until March. 

During that time frame, the P&F chart suggests that GDX should be able to move to at least 25.50, and perhaps as high as 28.50.

 

BNO (United States Brent Oil Fund)

BNO has reversed and broken its downtrend line.  After such a severe drop, there should be some base-building before it is able to get back in an uptrend, and 18.00 would seem to be the best it can muster over the short-term. 

Summary

Since its reversal from 2346, SPX has been in a counter-trend rally which should  move higher.  Some potential projections were made for the short-term in the daily SPX analysis, above.  It is not yet clear if a new low, or only a re-test of the low will follow after this bear market rally has been exhausted, with a new low coming only later on in the year.

Andre

 FREE TRIAL SUBSCRIPTON

With a trial subscription, you will have access to the same information that is given to paid subscribers, but for a limited time period.  I think you will find that knowing how far a move can carry is one of the most useful benefits of this service, whether you are a trader or an investor -- especially when this price target is confirmed by reliable indicators which give advance warning of a market top or bottom.  Furthermore, cycle analysis adds the all- important time element to the above price projections. 

For a FREE 4-week trial, further subscription options, payment plans, and for general information, I encourage you to visit my website at www.marketurningpoints.com.

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