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
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

iShares Russell 2000 IWM Leading Stock Market Decline

Stock-Markets / Stock Markets 2018 Dec 17, 2018 - 11:04 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – Bullish, but correcting within the long-term bull market trend.

Intermediate trend – A bearish correction has started which could retrace as low as 2200 before it is complete

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

IWM Leading Decline

Market Overview 

Market technicians who follow IWM are aware of its propensity for reversing its trend ahead of SPX and DJIA.  This was particularly obvious at the last market top when IWM printed its final high price on 8/31, while SPX did so on 9/21, and DJIA on 10/03. 

Last Friday, the major indexes re-tested their lows, but our leading index (IWM) closed the week at a new low.  That is a warning that the decline of SPX which is already approaching one hundred points is most likely not over, although a brief bounce could take place before we go lower. The hourly indicators are just beginning to show some positive divergence, but it is not the kind of pattern that normally leads to a significant reversal.  More work has to be done in the daily and hourly indicators before they are in a position to forecast an important low.  And we are supposed to be in a bullish seasonal period which normally generates a Xmas rally!  This year, it is going to come late and turn out to be a New Year’s rally. 

All this means that the previous low of 2583 is unlikely to hold, and a new low for wave A (which keeps on being pushed forward and lower) will be made, but once in place, it should be followed by a good countertrend rally. 

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

SPX daily chart 

The support level which had held the first two lows of the correction above the purple channel line was weakened on the last short-term decline to 2583; this was an intra-day low and the index did close above the channel line at 2637.  However, the ensuing rally met with serious selling and could not even reach 2700 before turning down, and the index is again approaching the last low.  This almost ensures a new low for SPX on this move, although 2600 could hold it for a few more hours. 

The daily oscillators showed minor divergence at the 2583 low, and this led to the ensuing bounce, but they have all turned down again and the two most sensitive ones have already made new lows while SPX is still above 2583.  This is another form of negative divergence which should result in a new low before this move is finished.  There are several possible targets for this decline, with the most extreme one just above 2500.  Ihave been wondering if we might not have to break below the February low of 2533 to confirm that we have started a bear market before we complete the A-wave. 

With the last rally from 2583, I thought that we might have a chance to get back to 2815 one more time, but this may not even be possible for the countertrend rally after we complete wave A.  If we get close to 2500 on this decline, even a .618 retracement of the total downtrend from 2941 would not get us there. 

SPX hourly chart

What you see on this chart is not the top of the SPX bull market; the top is off the chart and about 150 points higher.  Ever since the initial 337-point decline, the index has moved in a broad sideways pattern (roughly between 2600 and 2800) but lately, it looks as if we are beginning to move out of that range on the downside.  Each consecutive top has fallen slightly lower, but since the last decline broke about 20 points lower, and Thursday’s high could not even get halfway to the previous 2800 mark, the recent low of 2683 looks threathened.  The bears are gradually gaining control of the intermediate trend and are undoubtedly intent on proving it by making another new low right away. 

The move which started at 2685 last Thursday has come down in two phases separated by a downside gap at Friday’s opening.  The second phase, which started with that gap, has declined at a steeper angle than the first suggesting that the selling is accelerting.  However, the minor positive divergence in the CCI suggests that we may be ready for a bounce in that downtrend before making the final low.  The most logical target before we have a good reversal is about 2550, but there are lower P&F counts for the near-term which could be filled, first. 

DJIA, SPX, IWM, NDX (daily)

The relative strength position of the four indexes has not changed, but IWM is visibly increasing its weakness over the rest of the market.  Last Friday, it made a new low while the others held on to last week’s – for now.  By contrast, NDX appears to be doing the opposite: gaining a little, or at least retaining its relative strength of the past two weeks.  The weakness in IWM is warning that we may not yet have found a low for this move.

UUP (Dollar ETF)

UUP is the Energizer bunny.  It keeps on going and going!  I mentioned before that the green 30-dma acts as a flexible trend line which gives it support every time it is touched.  I guess we’ll have to wait until it is broken before a correction can start. 

GDX (Gold miners ETF) daily

GDX has risen to its former short-term high and could surpass it, but it will probably have to wait until there is a good correction in UUP before it can exceed the resistance which lies above.


USO (United States Oil Fund) daily

USO found support where it should have and may be starting to build a base.  Until it has, not much of an upside rebound can be expected. 

Summary

The rally from 2583 was of poor quality and this has led to another decline which is already testing support just above the former low.  Although a bounce could take place from Friday’s close, there is a better than even chance that a new low will be made before we can finally complete wave A of the correction. 

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