Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Rally Some Room to Extend Further

Stock-Markets / Financial Markets 2009 Apr 04, 2009 - 03:14 AM GMT

By: Anthony_Cherniawski

Stock-Markets Best Financial Markets Analysis ArticleAll day long on Friday indexes labored as if in a topping process. That would have been no surprise, since my model had been saying all along that the top of this rally would be 840-850 in the SPX and 1300-1315 in the NDX. I had given up earlier this week on the indexes achieving their target, although a close call. Today it achieved its target.


As we step back and look at the daily chart, the “impulse” that appeared to be the beginning of a reversal down was stopped by the 50-day moving average, the first time in this bear market. That is now support for the rally. Although overbought, it has some room to rally. In the ideal world, this wave should reach 950 or so. After several rounds of analysis, I have concluded that the top may be far shorter than that. For example, (a) = (c), a rule of thumb for corrective waves, at 915. If the SPX falls short of 943, it will be called an irregular correction. Read further below.

On a closer look, the Model is only begrudgingly giving up space for the rally to 848-855. I have simplified my wave count in that it makes the most sense, given the parameters of the Model. So, in other words, the rally may be weaker than most analysts imagine. Many are calling for 950 to 1000 and several prominent analysts are calling for the rally to extend until September. The Model is giving me too much dissonance to agree with those predictions at this time.

The NDX is already straining at resistance, which is at 1317. But there is one more fractal needed to finish wave 5. A brief pullback to 1275-1300 and one more probe into resistance may be all it needs. The top could be anywhere between 1317 and 1325. A look at the daily chart shows that it has a very “finished” appearance already. The final process could take a week or so, patience is needed. I am “stuck” with some small short positions taken late today, but I believe that a minor 4th wave pullback is imminent.

Contrary to what I had said earlier, this rally appears to be fizzling out far too soon to take advantage of it. If we are finishing an impulse to the upside, there is no profit in the long side now. Mistaking the decline to 1205 as the beginning of a larger correction kept me from recognizing the potential 5th wave that we have just seen. Again, we had an early cycle low that also skewed my view. But the bigger picture is what lies just “around the corner.” If my Model is guiding me correctly, the next decline may be the largest yet.

The next cycle bottom is due the first week of May. It will give us some idea how strong the next decline should be.

Here is a surprise for you. GLD is not declining as impulsively as I would have expected in a major decline. A step back to the daily chart reveals a horizontal expanding triangle, which has longer-term bullish implications. Right now my model still suggests a decline to 83 may be in the offing. The support zone that I have shown is the Fibonacci 382 retracement at 88 and the .618 retracement at 80. This can happen in a relatively short period of time, so I am suggesting being on the alert for GLD meeting its target and being ready to take advantage of the new rally as it turns…

Some may be wondering why the big sell-off in TLT today. Well, so am I. So far there is no technical damage done. It may simply be a deep retracement. If so, then it should be on its way fairly quickly to new highs. One possibility is there may have been some effort to stifle bonds due to the G-20 meeting this weekend. In any event, there is some serious support at 102 that should hold. If not, we re-evaluate our intermediate-term outlook. I haven’t liked TLT’s performance lately, so I have stayed in cash for my bond allocation.

I am hard pressed to say whether UUP wants to rally now or continue its slide. The explanation for the recent weakness in the Dollar is the Euro has been very weak of late. It has declined twice to 125 and only recently rallied to about 135. The rally doesn’t look impulsive, so the Euro may collapse and with it, the European Union. The G-20 meeting may be more of an effort to keep the European alliance alive than to solve the world’s economic problems, IMO. The discord among the various countries may sharpen if investors continue to look to the U.S. as a safe haven regardless of the moves in equities. As they say, “Follow the money!”

Just one more push up is all USO needs to complete its 5th wave of C. Because of the Model resistance, I suspect that wave C will be shorter than B, which is not terribly unusual. This pattern is called an irregular correction. The target for the final wave is 33-34.

This analysis has been a bit of an ordeal, since I have had to review and discard several closely held ideas about the market. I feel that the information that I am giving you now is more in sync with what has been happening rather than trying to fit my expectations over it. Although my practice has been profitable in the past two weeks, it could have been much more so by participating on the upside.

Enjoy your weekend and we’ll get busy again next week!

Our Investment Advisor Registration is on the Web .

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski 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