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
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Final Thrust is Likely

Stock-Markets / Stock Market 2017 Dec 17, 2017 - 05:15 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – The bull market is continuing with no sign of a major top in sight.
 
 Intermediate trend –Final top next week?

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

A Final Thrust is Likely

Market Overview

In the last letter, I discussed the evidence building up warning that we were getting close to an intermediate top.  I had also mentioned that there appeared to be some correlation between GDX making a 52-wk low and top in SPX.  Ideally, the 52-wk cycle of GDX was supposed to bottom next week, but it looks as if it has already occurred!  If that relationship continues, SPX should be just about there, and what better time to reverse than next week, when congress passes the tax bill (now that the entrenched hold-outs have relented), with traders selling on the news.  Of course, if it does not pass, the effect on the market is predictable.

The last accumulation pattern of the SPX occurred at the 2635 level and created a potential count to about 2690+ maximum, and we could find some confirmation of that projection in the pattern just formed last week.  So, let’s see what happens over the next few days

Chart Analysis  (These charts and subsequent ones courtesy of QCharts)

SPX daily chart:

You may notice that the market strength has forced me to redraw some of the larger channels in a more conventional way. Prices are no longer squeezed against the channel tops, but could still move higher before touching them.  The top (black )channel is also best drawn as a wedge pattern which suggests that the final wave is most likely and ending diagonal triangle, which is a terminal pattern. 

We discussed several other conditions besides channel resistance and projections which are associated with market tops.  These include EWT wave completion (as an EDT), cycles bottoming directly ahead, and negative divergence at the weekly and daily indicator levels.  If you look at the oscillators at the bottom of the chart, you will see that negative divergence is very plain, and this tells us that in spite of the apparent price strength, there has been a significant loss of momentum over the past couple of weeks.  In fact, the volume pattern also suggests that distribution is most likely taking place.  Notable was the DJIA’s huge spike in volume on Friday, as it barely cleared the former high. 
All the above warning signs suggest that the index is probably reaching a turning point. Even if each factor mentioned represents one probability, adding them up only gives us a higher probability but not a certainty.  In the last letter, we touched upon what would create the certainty of a price reversal of  some magnitude. It would involve the breaking of important trend lines and breaching important support levels in order to create a sequence of lower highs and lower lows.     

That would start with breaking the black trend line( #1) and moving below the top support level (horizontal red trend line).  In order for this to be an important decline, we would also have to break trend line #2, and breaching the next two (red) support levels.  Should we continue to decline until we reach 2557 and the starting point of the EDT, it would represent a correction of over one hundred points.  This may be enough for this phase of the decline, although we will know better when the entire top has been completed and the reversal has occurred.  Then, we can make a fairly accurate estimate of the correction’s extent.

SPX hourly chart:

The same black wedge pattern and green channel are expanded on the 6m chart.  As you can see, the index could easily meet the top projection without really violating any of the top channel lines.  It’s also interesting to observe that since the 2557 level, the blue 55-hr MA has acted as support for prices, while the 233-hr MA has pretty much followed the bottom line of the green channel.  We can therefore assume that a break below both of these trend lines and MAs would bring about an important correction. 

The hourly oscillators are also showing some divergence which may not hold up if we go all the way to the higher target, but we do not have to achieve those maximum levels and could reverse from a lower one.  There are several interim phase projections which could turn out to be the final high. 

An overview of some important indexes (daily charts)

There has not been much change from last week in these indexes, but what did occur could be significant.  The semiconductors, represented by SMH (top right) remains relatively weak.  More importantly, IWM (bottom left) is now clearly diverging from the overall market.  This is important since it is one of the most reliable leading indexes.  TRAN (second from left, bottom) is also beginning to do the same, which is also important.  Too early to draw definite conclusion, but definitely a warning.

UUP (dollar ETF)

UUP is still neutral short-term, halting its advance on the trend line last week but not being repelled by it .  More time is required to assess its intention.

GDX (Gold miners ETF)

GDX may have reached its intermediate low a week ahead of the ideal time frame.  Next week will decide if it is ready to resume its uptrend or needs a little more consolidation.  If it does start to move higher, it will run into some resistance around 23.00.  For a longer-term advance, it will be challenged by several trend lines of various degrees, and we’ll have to see how it handles them.  For a decisive intermediate term break-out, it will have to move above the 25.50 tops.  If it can clear them, it can advance to 35-40.00, or more if it adds an additional count to the accumulation phase.

USO (United States Oil Fund)

USO is observing the anticipated resistance with a sideways consolidation.  Since the bias is still for higher prices, it’s probably only a matter of time before it clears it.  The resistance is mostly in the first layer, and the second may not produce much of a challenge.  After moving above it, it could advance to about 15.00 before its next consolidation process begins. 

Summary

Nothing has occurred during the past week to alter my view that a top is in the making with a subsequent initial decline into mid-January or later,   

Andre

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