Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21
Scan Computers - How to Test New Systems CPU, GPU and Hard Drive Stability With Free Software - 4th Jun 21
Hedge Funds Getting Bullish on Gold - 4th Jun 21
THERE ARE NO SOLUTIONS When the Media is the VIRUS - 4th Jun 21
Investors Who Blindly Trust the ‘Experts’ Will Get Left Behind - 4th Jun 21
US Stock Market Indexes Consolidate Into Flagging Pattern – Watch For Aggressive Trending Soon - 4th Jun 21
Microsoft (MSFT) Stock Trend Analysis - 3rd Jun 21
No More Market Bloodbath – Beyond Cryptos - 3rd Jun 21
Bank run, or run from the banks? - 3rd Jun 21
This Chart Shows When Gold Stocks Will Explode - 3rd Jun 21
The Meaning Behind Gold’s Triple Top - 2nd Jun 21
Stock Market Breakout Or Breakdown – What Does The Next Big Trend Look Like? - 2nd Jun 21
Biden’s Alternate Inflation Universe - 2nd Jun 21
What You Should Know Before Buying Car Insurance - 2nd Jun 21
Amazon (AMZN) Stock Summer Prime Day Discount Sale - 1st Jun 21
Gold Investor's Survival Guide - 1st Jun 21
Silver and Copper to Benefit from Global Electrification Push - 1st Jun 21
Will Gold Shine Under Bidenomics? - 1st Jun 21
Stock Market Buy the Dip, Again?! - 1st Jun 21
Stock Market Consolidation Ahead - 1st Jun 21
Stock Market Summer Correction Review, Crypto CRASH, Bitcoin Bear Market Initial Targets - 31st May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

First Tier Resistance Breached Key Level Exceeded

Stock-Markets / Stock Markets 2015 Oct 25, 2015 - 12:34 PM GMT

By: Andre_Gratian


Current Position of the Market

SPX: Long-term trend - Bull Market?

Intermediate trend - SPX is in the midst of an intermediate correction (at least).

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 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


Market Overview

After undergoing some price deceleration as it approached the key level of 2040, (thereby suggesting that overhead resistance was having some effect) SPX was given the catalyst it needed to propel it through the obstruction that stood in its way. On Thursday, Mario Draghi made some bullish comments about more stimulus, and this was followed by China cutting its interest rate again on Friday. The index responded with a 60-point move to 2080.

Now that we have overcome the lower resistance band, we should expect higher prices until such time as the typical warnings that we have come to the end of the road begin to appear. These consist of deceleration in price, divergence in breadth and momentum indicators, as well as the refusal of some key indexes to follow the lead of the SPX. Already, as we will see later, last week IWM and XBD increased their relative weakness to SPX by not keeping up with its rally. But the signs are, at best, mixed right now and we will have to see if the upside momentum has enough reserve to take us to a new high. If the August low represented the end of primary wave IV and if we are now in primary wave V, the odds of exceeding 2135 -- which is only 60+ points away -- are pretty good. We should also be aware that when this top is in place, the end of the bear market will be far more likely and not just a false alarm.

Let's take a look at the charts to see where we are!

Intermediate Indicators Survey

Last week, the weekly MACD recovered almost 7 points to -18.30 and is still negative, but the histogram turned positive.

At 100, weekly SRSI has now reached the top of its range and we'll need to wait until it begins to loose upside momentum to signal a reversal.

The NYSI (courtesy of has gone positive for the first time since June and has started a good uptrend. However, the degree of overbought conditions in both its MACD and RSI are suggesting that a top may not be far away. Its ability to continue recovering before turning down again will give us some clues about the underlying market strength.

In P&F charting, congestion from the low to the break-out point is the most dependable. That was filled at 2040. We have now started on the count at the left of the low which still has more potential. We'll consider the validity of each phase count by observing price behavior and that of the indicators as the index works its way through each one

Chart Analysis

Daily SPX chart (courtesy of, as well as others below).

This chart has several interesting features that we will address one by one. First, the first tier of resistance was augmented by the top trend line of the red correction pattern. Prior to breaking through it, the index had been drifting away from the top line of its minor uptrend channel and had crossed over to the lower channel line as if it were ready to break out of it. This was obviously a decision point and, as mentioned earlier, a catalyst appeared just at the right time to help it decide for the upside. The former resistance band (marked by dashed lines) has now become a support level.

As a result of its rally, SPX has now reached the bottom of the next tier of resistance which starts around 2075. It is also interesting that, at the same time, the index is now back-testing the bottom channel line of its intermediate blue channel, which should provide additional resistance. It has also reached the green trend line which is drawn across the last two former tops. This green trend line has been discussed before. It extends at a fixed angle of ascent, and all parallels to it drawn from any former short-term low or high point in the market will act as a support or resistance line, depending on the direction from which it is approached.

So we should be at another decision point for the index. It has reached overhead supply, it is back-testing the busted intermediate channel, and is finding additional resistance at the green trend line. How it reacts to this level over the next few days should clue us about its future intentions.

The indicators are giving mixed signals! The MACD remains in an uptrend with only the histogram showing some minor deceleration. The SRSI has tried to correct a couple of times, but could not follow through. The third time could be the charm and signal a correction, especially since the A/D oscillator has shown negative divergence at the last two market peaks, with the second even lower in spite of the strong rally.

Hourly SPX chart.

The resistance at the top of Friday's move consists of the various trend and channel lines discussed above which are more visible on this chart. In addition, the index completed 5 waves from the 2018 level, and the effect of all this is already showing; the top apparently having been made in the next-to-last hour of trading with a move outside of the minor channel in the last hour. This places the index in a good position to open lower on Monday morning and start correcting. On this chart, you can see how the index was rescued just in the nick of time by Mario Draghi's announcement; it was already starting to breach the blue channel.

In the indicators, the MACD is still positive, but not quite as much as displayed by the daily one.

Here, deceleration is at work and evident when comparing the last phase of the indicator to early October. The SRSI started to make a bearish cross in the last hour of trading. The A/D oscillator is by far the weakest, confirming the negative divergence displayed at the daily level.

The first test of the uptrend from 1872 was passed at 2040 with an "A" grade. Let's see how the index handles this second test. After trading for a few more days, we'll find out if we continue to forge ahead or develop some kinks in the rally.

XBD (American Securities Broker/Dealer) and more

It appears that last week's market strength was reflected mostly in the SPX although, to be fair, the NASDAQ 100, SOX and DJIA also had relatively good moves. However, some of the key indexes, the mid-cap and IWM (shown below) were the worst laggards (or is it best?) and the XBD and TRAN did not exactly shine, either.

It is too soon pass judgment on the entire market because of these few leaders' action. For all we know, they may start to catch up over the next couple of weeks. But the last phase of a bear market can be fickle and we should be looking for warnings that this bull is coming to an end. These are some of the warning signs!

UUP (dollar ETF)

The dollar also reacted to Mario Draghi's comments which cause the Euro to retrace and the dollar to surge. This time, it looks as if UUP intends to make a clean break out of its consolidation phase, but it had several starts of this nature before and failed to follow through. Let's see if it does this time. If this is for real, it is now ready to complete the move which was projected when it broke out of its base (to 28/29). What makes this credible is that the base count is now fully confirmed by the re-accumulation level which now looks complete.

GLD (Gold trust)

GLD may be reacting to the strength in the dollar. If the latter has the capacity to rise to its projected high, GLD may still get a chance to reach its unfilled projection of 100!

USO (United States Oil Fund)

Besides the continued crude glut, USO will be affected by the dollar strength as well, and this could also send it to new lows. I know that this may sound ridiculous to some, but if USO just completed a re-distribution phase above 13, it has now the potential to reach the 8 dollar price which was originally suggested by its former count.


SPX had an original base projection to 2040 which corresponded to reaching the first tier of resistance formed by overhead supply developed during most of 2015. Just as it was about to roll over from that level, it was rescued by comments from Euro Central Bank's president Draghi stating his intention to continue an easy money policy, and by another cut in China's key interest rate. This sent the index soaring some 60 points to another important level where it is meeting with another zone of stiff resistance.

Its ability to push through this level as well should confirm the EWT analysts' premise that we are now in primary wave V and that the index is probably on its way to besting its 2135 high.



If precision in market timing for all time framesis something that you find important, you should

Consider taking a trial subscription to my service.  It is free, and you will have four weeks to evaluate its worth.  It embodies many years of research with the eventual goal of understanding as perfectly as possible how the market functions.  I believe that I have achieved this goal. 


For a FREE 4-week trial, Send an email to:


For further subscription options, payment plans, and for important general information, I encourage

you to visit my website at It contains summaries of my background, my

investment and trading strategies, and my unique method of intra-day communication with

subscribers. I have also started an archive of former newsletters so that you can not only evaluate past performance, but also be aware of the increasing accuracy of forecasts.


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 - 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