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
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Stock Market Intermediate Topping Process Continues

Stock-Markets / Stock Markets 2019 Nov 04, 2019 - 09:16 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – There are no clear signs that the bull market is over.

Intermediate trend –  Most likely building an intermediate top.

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


Intermediate Topping Process Continues 

Market Overview

Last week SPX and NDX made a new all-time high.  DJIA failed to do so by a small margin.  NYA (the broadest index) remained well below its January 2018 high.  And, of course, IWM clearly remains in a 14-month downtrend.  It’s obvious that the stock market, as a whole, is a mixed bag.  If it were trying to re-establish it’s long-term uptrend, IWM and NYA would be leading and not lagging.  We should therefore conclude that it must, instead, be forming a top of at least intermediate proportion which will be followed by a correction proportional to the degree of distribution which is currently taking place.

It may be time to consider that the 40-week cycle did make its low right on schedule, on 10/03/19, exactly 40 weeks from its previous low of 12/26/18.  The December low ended a correction of 594 points!  By contrast, the recent cycle low only produced a decline of 172 points and prices have been pushing up ever since.  It is understandable that such a comparatively mild correction should have created some skepticism regarding whether or not the low had been seen.  However, the persistent uptrend since 2856 should be an indication that the 40-week cycle is back in an up-phase.  Until a sudden, sharp decline proves otherwise – in the near future, this should be our current assumption.
 
Based on that premise, how much higher will we go, and how much longer will it take to bring about the final uptick to the current uptrend?  We have two ways to determine this!  Neither can produce an exact answer but only an approximate one.  However, together they suggest that we could already have arrived!  Eric Hadik (Insiidetracktrading.com) is calling for a cluster of cycle tops between November 1-15.  The SPX Point &Figure chart made a congestion pattern low in late August which called for a move to ~3060.  In early October, the index appeared to produce a confirmation pattern leading to the same projection.  On Friday, SPX closed at 3066.72.  Consequently, based on these ballpark projections, we could already have arrived!  (If we keep on going, the next projection would be ~3110).

Needless to say, the next couple of weeks will be watched closely to see if this time/price projection is correct.  Assuming that it is,  what kind of a correction can we expect to see?  The 40-wk cycle  would now be only four weeks along, and if we start a decline, it will put on the brakes preventing a sharp decline from taking place but instead, a gradual one.  This scenario would provide substance to the rounding top theory that I have been suggesting.  If so, we could start slow and, several months down the line, as we approach the low of the correction, accelerate into it. 

Market Analysis (All charts are courtesy of QChart)

SPX daily chart

On Wednesday, the SPX made a short-term high and pulled back on Thursday, found support on a trend line and the 9-dma, and made a new high on Friday.  This keeps the daily uptrend going!  As stated above, the P&F projection taken on a 10-point chart calls for approximately 3060.  In order to reverse its trend, the index would have to close below 3020 -- which is now a strong support level. Therefore, even if we have seen the rally high, it is likely that a congestion pattern would form above 3020 before rolling over. 

There is some divergence on the CCI between the current high and the 3022 high which occurred six weeks ago.  That divergence is more pronounced on the A-D oscillator, at the bottom of the chart.  There is no divergence on the SRSI; it is simply overbought.  This suggests a potential top in the making, but the oscillators will all have to turn down to signal the start of a downtrend. 

What is needed to confirm that a top is in place and that a decline has started is crystal clear, and we must wait until it takes place.  Also, the market action must prove that it is not capable of moving to 3100 before reversing. 

 

SPX hourly chart 

The hourly chart provides an opportunity for closer scrutiny about what the SPX is doing.  On this chart, the daily trend is reduced to a rising channel which has now moved well beyond ifs former high of 3022.  This small channel appears to be built on the lower trend line of the larger, daily channel which is providing support.  To put an end to this trend, we would need to break below 3020 and keep going.  That would not only break that support, but it would also halt and reverse the sequence of short-term higher highs and higher lows which define the current uptrend. 

Friday’s action suggests that we met some resistance at the top line of the small channel since, after the opening surge, the index continued to trade below it; although the push higher at the close, and the lack of clear divergence in the oscillators leaves Monday’s opening in doubt. 

UUP (dollar ETF) daily

If UUP moves a little lower, it will find support on the blue channel line and the dashed red line.  This would almost ensure a rebound, but  failure to go past 27.00 would likely entail a break to a lower level.  The weekly chart suggests that an intermediate correction has started.

 

GDX (Gold miners ETF) weekly

GDX should be able to extend its current rally to about 28.50-29.00 before running into resistance.  If it does not meet with heavy selling at that level, based on the P&F chart formation, the move can extend to as high as 34.00.

 

CCG (canopy growth) daily

CGC found support at the bottom of its red channel.  After an initial bounce, it may be re-testing its low.  If that low holds, the next move could be to the mid-channel dashed red line.

BNO (U.S. Brent oil fund) daily

BNO is rallying with the market.  When the market rolls over, so will BNO.

Summary

In spite of some additional short-term strength to a new all-time high which is primarily driven by strength in the NDX, SPX is most likely putting the final touch on a large intermediate top.

Andre 

FREE TRIAL SUBSCRIPTON

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