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
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Cycle Turning Points Analysis 9th Setember 2007

Stock-Markets / Cycles Analysis Sep 09, 2007 - 07:01 PM GMT

By: Andre_Gratian

Stock-Markets Best Financial Markets Analysis Article

Current Position of the Market

SPX: Long-Term Trend - The 12-yr cycle is still in its up-phase but, as we approach its mid-point, some of its dominant components which are topping will restrain the bullish effect of the 4.5-yr cycle which is now in an uptrend, and this could lead to another correction in 2008.

SPX: Intermediate Trend - Climactic action followed by an immediate reversal suggests that the 4.5-yr cycle has bottomed but some additional consolidation may be required before new highs are made.


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 determines 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 .

Overview

The SPX saw plenty of action over the past two weeks. Since the publication of my last newsletter there has been a 46-point decline, a 64-point rally, and another 44-point decline. These were brought about by short-term cycles which, in the current volatile atmosphere, are packing a bigger punch than usual.

With some minor differences, all equity indexes have formed very similar patterns since they peaked in mid-July. The overall picture suggests that the decline made a corrective A-B-C pattern which ended in a selling climax at the 4.5-yr cycle low in mid-August, and which was followed by a strong rally. With a short-term cycle probably at or near its low, we may now be in a position to attempt a resumption of the uptrend.

The most noteworthy event of the past two weeks is that at its rally high on 9/04, the NDX had retraced almost 90% of its entire decline from 7/19 to 8/16, easily outpacing all other indices. Since the NDX has proven historically to be an excellent precursor of intermediate trends, this is a bullish sign.

What's Ahead?

Momentum:

Here are a few things to note on the following chart of the daily SPX (courtesy of StockCharts).

Positives:

  • A climactic low (which held above its last intermediate-term low) was followed by a strong rally and a pattern of higher highs and higher lows.
  • The 200 DMA is still rising and the 50 DMA is beginning to flatten.
  • The Money Flow Index is strong.

Neutral/negatives:

  • The RSI has not yet broken out of its downtrend line.
  • The index has not yet surpassed its former 1503 high.

Taking all this into consideration, the index is in a short-term uptrend of higher highs and higher lows, but needs to overcome the 1503 level before it is in a confirmed intermediate-term uptrend. And, of course, it will have to rise beyond 1555 to continue its long-term trend. With the 4.5-yr cycle ostensibly having bottomed on 8/16, it's probably only a matter of time before both of the longer-term trends are resumed.

In retrospect, the recent price action is probably going to be a consolidation in a long-term uptrend.

I have expanded the weekly chart to include the entire bull market move from 2002. Notice that I have drawn 2 channels which represent the uptrend. The black dashed line connects the tops and a parallel is drawn across the lows. The second is formed by connecting the 2003 and 2006 lows with a (blue) trend line, and placing a dashed parallel line at the 2004 top.

Whichever channel you choose, you'll have to admit that the SPX is still in a long-term uptrend. Notice also that the recent decline found support near the blue uptrend line.

In the momentum indicator at the bottom of the chart, the thin line has now broken outside of its down channel, but is still below the heavy line. This is an improvement, but not yet a confirmation. that the trend momentum has shifted to the upside.

Cycles

I am going to continue to assume that the 4.5-yr cycle made its low on 8/16 and has now turned up.

Until recently, I was not entirely sure if the 20-wk cycle had bottomed on 8/6 or 8/16 and was waiting to see which of the two dates would be confirmed by the market action. It's beginning to look as if the former will be the correct one. There is a dip where the 2.5-wk should have been, and the current decline looks like it was caused by the 5-wk, which may have bottomed on Friday, or will do so Monday. Any serious weakness on Monday would be an indication that larger cycles are in control.

A good argument that the bull market is intact is made by the 4.5-yr and the 20-wk cycles which both exhibited extreme right translation at their recent peaks before they made their lows, a sign that longer-term cycles are still pushing up.

Looking ahead, the market will have to contend with two cyclic factors. The first is that there is a nest of short-term cycles occurring in the 3rd week of this month, and the second is that the 12-mo cycle due about October is in the process of making its low, which is probably the main reason why the short-term cycles are having such an impact on prices. This would tend to signal that additional consolidation for the market lies directly ahead. However, we cannot discount the impact of economic factors. If the Federal Reserve lowers interest rates on 9/18 or before, it will undoubtedly create a rally which could enhance the upward pressure of the cycles which have already bottomed. After the 12-mo cycle has turned up, all cycles should be in synch to push the market up to new highs.

Looking farther out, the 2-yr and 6-yr cycles are expected to exert downward pressure by the end of the year.

Projections

In my last Week-end Report to subscribers, I made the following statement:

The bottoming action and reversal formed a Point and Figure base which has two valid counts of 1485 or 1497. There is also a Fibonacci target zone of 1480-1498. Both of these projections, achieved by two different methodologies which closely confirm each other, may end the initial rally of the SPX from 1372 and lead to some additional base building and perhaps a test of the lows.

The SPX did in fact rise to 1496.40 before turning down. Since then, it has been correcting and reached a low of 1449.07 on Friday. This satisfied short-term Fibonacci and Point & Figure projections for the decline.

The overall action of the market gave some indication that the low could have been made on Friday, but for a reversal to be confirmed, the index would have to rise above 1465. No projection to the upside can be made until we have a trend reversal but, should this occur, it is conceivable that a rally could develop which will challenge the recent high.

Breadth

The Summation Index is rising from a very oversold condition, but is still in negative territory.

The McClellan indicator made a double-top in an overbought position before correcting once again to the zero line. It is currently neutral.

On Friday, hourly A/D figures were very negative but, in the last 3 hours of trading, they showed that selling pressure was abating -- a condition which normally signals that a cycle is bottoming and that a trend reversal is about to take place.

Market Leaders & Sentiment

Below is a chart of the NDX/SPX relationship. As you can see, since the ratio has exceeded its August high by a wide margin, it strongly favors the NDX. This would seem to confirm other evidence that suggests that the bull market is still intact.

The short-term ISEE option index is currently neutral/negative. However, according to Thompson

Financial, insider buying in August rose to its highest monthly volume level since 1990. This is of

long-term bullish significance.

Summary

The original base count from the low was met last Friday at 1496.40, and this -- with the assistance of a short-term cycle -- brought about a reversal. The SPX may now want to expand its base by forming a consolidation pattern which will expand the upward projection and could take at least to the end of September to complete. The 12-mo cycle normally makes a low around this time of the year, and it will have to go through its bottoming process before the market can resume its uptrend.

A market advisory service should be evaluated on the basis of its forecasting accuracy and cost. This service is probably the best all-around value. Two areas of analysis that are unmatched anywhere else -- cycles and coordinated Point & Figure and Fibonacci projections -- are combined with other methodologies to bring you weekly reports and frequent daily updates.

The following are examples of unsolicited subscriber comments:

What is most impressive about your service is that you provide constant communication with your subscribers. I would highly recommend your service to traders. D.A.

Andre, You did it again! Like reading the book before watching the movie! B.F.

I would like to thank you so much for all your updates / newsletters. as i am mostly a short-term trader, your work has been so helpful to me as i know exactly when to get in and out of positions. i am so glad i decided to subscribe to turning points. that was one of the best things i did ! please rest assured i shall continue being with turning points for a long while to come. thanks once again ! D.P.

But don't take their word for it! Find out for yourself with a FREE 4-week trial. Send an email to ajg@cybertrails.com .

By Andre Gratian
MarketTurningPoints.com

A market advisory service should be evaluated on the basis of its forecasting accuracy and cost. At $25.00 per month, this service is probably the best all-around value. Two areas of analysis that are unmatched anywhere else -- cycles (from 2.5-wk to 18-years and longer) and accurate, coordinated Point & Figure and Fibonacci projections -- are combined with other methodologies to bring you weekly reports and frequent daily updates.

“By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again -- and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint.” -- Mark Twain

You may also want to visit the Market Turning Points website to familiarize yourself with my philosophy and strategy.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