Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Split Stock Market Warning

Stock-Markets / Stock Markets 2019 Mar 18, 2019 - 04:13 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – Is the long-term trend resuming? Is this a B-wave?  Too early to tell!

Intermediate trend – Warning from leading indexes.  Top of B-wave possible.

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

Split Market Warning

Market Overview

I am sure that I am not the only analyst who keeps an eye on the Russell 2000 index to evaluate the market trend.  It has an excellent record of signaling important turns in the  market.  As an example, when SPX made its October 4, 2018 high and started the most important correction since May 2015, IWM had already been in a decline for about a month.  But there are others that appear to have the same intuitive ability!  The Dow transportation index topped on 9/14/18, and XBD had been a full-fledged downtrend since 3/12/18.  Advance warning was also given by IWM and XBD in 2007 well ahead of the market peak.  Given these indexes’ apparent predictive propensity, it would behoove us to note where they stand today in relationship to SPX.  Here is an up-to-date daily chart of all four indexes:

All three “leading” indexes made their highs relative to SPX about three weeks ago, as they were decisively repelled by their 200-DMA.  It could be an early warning of market weakness ahead, but since the time difference between tops is relatively short (about 3 weeks), we need to wait for a little more confirmation that this is a valid sell signal.  The first thing to look for will be to see if they begin to decline below their blue 50-DMA.  Note that all four 50-DMAs (including SPX’) are trading below their 200-DMAs which, to many analysts, is also a sign of long-term weakness.  Let’s give it another week to see if there is any change in the relationships before speculating further on what it means.

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

SPX daily chart

Last week, SPX made up all the loss of the previous week, plus a little more;  but by Friday, it looked as if it was ready to pull back.  If there is anything to the underperformance of the three leading indexes mentioned above, then signs of weakness should soon appear in SPX and other benchmark indices.  As a side note, DJIA is already relatively weak, but since this is primarily due to one of its components (BA), we need additional evidence.  Friday’s rally to a slightly higher high was probably the result of options expiration and with that behind us, we could resume the downward tendency which was apparent on Thursday. 

Before we go down, we have to stop going up.  And if we can refrain from making a new high next week, we’ll have a good start on beginning a trend reversal.  Quickly dropping below 2800 would be the first step, followed by a challenge to the 2722 level.  Ever since the 2346 low, SPX has been making a series of higher highs and higher lows.  These have created the uptrend!  Therefore, breaking last week’s 2722 low will be our first objective toward extending the correction which attempted to start last week.  The fact that the three leading indexes listed above ignored last week’s rally is not a bullish sign. 

And if we resume the correction, what can we expect?  Once again, we can turn to the Fibonacci ratios for an estimate.  The normal, minimum retracement of a completed uptrend is .382.  So if we do complete this uptrend at 2831, .382 of the 485-point rally from 2346 to 2831 would be 185 points, or a decline down to 2646 before we should look for another reversal to the upside.  Of course, we made the same argument two weeks ago, but we stopped well short of our downside projection and went on to make a new high.  But then, we did not have relative weakness showing in our three leading indexes! 

We should also consider that, at the end of the week, the three oscillators were not all that bullish for an index making a new high -- especially the A/D indicator which never did become positive during the week in spite of a 109-point rally! 
 

SPX hourly chart

With just a quick glance at this chart, it would not be surprising if we were getting ready to reverse the trend for a consolidation, at least (and perhaps more).  Some analysts have not given up on the idea that this is a B-wave from 2346 and that we may be ready to start on the C-wave to challenge the former low.  After all, the expectation was for the correction to retrace about .382 of wave 3 (from 1011 on 6/27/10) which would have taken us to about 2200 and good support, instead of stopping precisely at the 200-wk MA and rallying from there.  In the next section, we will also see why the extent of the rally in all four indexes would have a good technical reason to end at this level -- whether or not this results in the beginning of a C-wave.
 
But here, we are concerned with the short term.  On Wenesday, SPX met with resistance at the extension of the trend line drawn across the two former tops as well as at the extension of the broken, green channel line (which is known as a kiss-back).  If prices were rescued by Friday’s options expiration, which caused them to retest the two trend lines one more time (and being pushed back one more time, into the close) we should see some selling appear by Monday’s opening.  The lack of negative divergence in the CCI does not make Friday’s top as serious as it could be, but the rounding top pattern itself is not that bullish looking either.

SPX, IWM (wkly)

This week, I will only post two weekly charts -- that of SPX and IWM -- so I can show you more clearly why we could very well stop the rally from 2346 (SPX) in this area, so that it becomes only half of the corective pattern from the top.  First, note that IWM did correct a full .382 of the former wave 3 from 2010, while SPX stopped short, finding support on the 200-wkly MA and could, conceivably, complete the rest of a normal retracement. 

More importantly, I have drawn a corrective channel in red and, as you can see, both indexes have now risen to the top of the channel with IWM already finding resistance at the lower of the two top channel lines.  Also providing resistance to both indexes is the dashed black line drawn as a parallel to the initial lows of the correction.  This does not ensure that this rally is a B-wave, but it does suggest that a retracement is likely from this level.

UUP (Dollar ETF) (daily)

After re-testing its high, UUP has pulled back to the bottom of a new up-channel.  Even if it breaks the short-term trend line, it does not mean that it is starting a major correction.  For that, it would have to drop below the 200-DMA and keep going.  While some additional consolidation around this level cannot be excluded, the odds of making a new high are still considered good.

GDX (Gold miners ETF) (daily)

To some extent, the price of gold is dependent on what the dollar does, but it does have a life of its own and should be analyzed individually.  It is not clear if GDX is now ready to extend its move to challenge the major top channel line at about 24.00, or if more consolidation will be required, first.  This will primarily depend on whether or not it can hold above its current trend line from 18.50.  Doing so for the next few days could encourage buyers to step it, while an early break would result in another leg down before resuming an uptrend.

CGC (Canopy Growth) (daily) 

It’s now, or a missed opportunity for CGC to move higher!  Not sure how the stock would react if the market begins to correct.  I suppose it will depend on the degree of the correction.  It appears to be moving in tandem with the major averages.

 

BNO (United States Brent Oil Fund) (daily)

As expected, BNO has pushed a little higher and does not look quite finished.  However, its uptrend should be limited to the overhead resistance caused by the 200-DMA – if it can get that far!

 

Summary

There’s a good case to be made for the SPX to find a top in this general area and to start retracing at least a good part of its rally from 2346.

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