Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Turning Points

Stock-Markets / Stock Markets 2010 Jun 20, 2010 - 03:31 PM GMT

By: Andre_Gratian

Stock-Markets

Best Financial Markets Analysis ArticleCurrent Position of the Market
Very Long-term trend - Down! The very-long-term cycles are down and if they make their lows when expected, the bear market which started in October 2007 should continue until about 2014-2015.

SPX: Long-term trend - Up! We are in a medium-term bull market, which is a corrective move within a long term bear market. This bull market should last until 2011


SPX: Intermediate trend - It is likely that the index has made a top of intermediate nature, but this is not yet confirmed.

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 is in a medium-term bull market which appears to be a corrective phase within the secular bear market that started in October 2007 and which is likely to continue until about 2014-2015. This bullish phase is expected to extend into 2011.

After a lengthy rise from March 2009, a decline started at 1220 which found support at the 1040 level in the form of a double-bottom, and the uptrend which began on 6/8 from that level is still in effect, although a minor top is expected to be reached perhaps as early as Monday. A retracement caused by the bottoming 17-wk cycle should take effect and develop into a fairly shallow corrective pattern which could be complete by next week. This cycle was dominant last year, but it has not been consistent historically in the amount of weakness it brings to the market, and it should not be much of a factor as it comes to the end of its current phase.

After this near-term consolidation has taken place, the index should attempt to resume its uptrend, and shortly thereafter make a more important top and start a decline into the 2-yr cycle low.

These are my expectations for the near-term -- subject to adjustments and refinements -- as the SPX continues on its course. At some point in the second half of the year, probably in late August, a more significant decline should take place into the Fall as the 4-year cycle makes its low.

It is not yet clear if 1220 will be surpassed or if there will only be a test of the high, but we should know by the end of August.

Analysis

Chart Pattern and Momentum

Since we already have a pretty good perspective of the longer term trend, and are primarily trying to establish how far the current short-term uptrend will take the index, we'll skip the weekly chart and go directly to the Daily Chart.

After reaching 1220, the SPX first broke out of the black up-channel and almost immediately afterwards, also broke out of the blue intermediate channel from March 2009. This was a signal that the intermediate trend had most likely reversed, especially since the weakness took the index below its 200-DMA and the MACD dropped below its former low of early February (as we will see later, this is also indicated by the NYSI).

By the second test of the 1040 level on 6/8, positive divergence had developed in the two lower oscillators and this told us to expect another short-term reversal. But when it occurred, it was difficult to assess just how much of a rally the index would muster considering that there were two important cycles slated to make their lows in the near future. We know now that the first cycle has had little effect on the uptrend, and since prices have again risen above the 200-dma, this has generated a potential target of 1136-1137.

The two dotted trend lines drawn from the top are resistance lines. Prices have reached the first one which is also the level of the 50-dma. With the 17-wk cycle expected to make its low next week, it is likely that the index will pause in this area, and then go on to complete the rally at the next dotted trend line which, by the time it gets there, will be in the vicinity of the anticipated target. By then, the indicators will probably be in a position to give a sell signal, and prices should then retrace into the 2-yr cycle low.

It is not possible to determine at this time how much of a decline will be generated. The odds are fairly good that 1040 will not be penetrated before the cycle bottoms. After the decline is complete, another uptrend rally should begin which may be in a position to test the 1220 high. In fact, since prices have held at 1040, we are technically still in an intermediate uptrend and it is possible that we could see a new high before prices come under pressure from the bottoming 4-year cycle.

We'll now turn to the Hourly Chart to examine up close the near-term topping formation developing at the first dotted resistance line and at the 50-dma.

The green channel outlines the current uptrend from 6/8. The first top on 6/16 already represented a move away from the top of the channel. After breaking the inner channel line, on Thursday the index found support on the outer channel line but has not been able to move away from it. Negative divergence with the oscillators is increasing, and the structure looks as if only one more little thrust is needed to complete this phase. This is confirmed by the Point & Figure chart which has a near-term count of 1125-1127. Everything considered, it would seem that a reversal is imminent.

The red dashed line at 1099 represents the level of the 200-dma and looks like a good retracement level where the index could find support and consolidate before its final move to 1136-37.

That's the anticipated scenario for the next week or ten days. Let's see if the market obliges.

Cycles

The 17-wk cycle is ideally due next week. The 2-yr cycle, some time in July.

The 4-yr cycle is due in the Fall and could nest with the next 17-wk and the next 9-mo cycles to create an intermediate low.

Projections:

The last little shelf which formed on Friday projects a P&F count to 1125-27. After a pull-back into the 17-wk cycle low, a final rally move to 1136-37 is anticipated. The target is marked with a pink horizontal line on the hourly chart.

Breadth

The NYSE Summation index (courtesy of StockCharts.com) may be giving us a warning about the longer term trend. Since its August peak of last year, the index has been in a downtrend, making a series of lower lows.

Over the short-term, note how weak the uptrend from 6/8 has been. On that date, the index made a much lower low than the Feb low while the SPX held at 1040 and essentially made a double bottom; and the NYSI recovery from that low has been puny. It has not even been able to get back into positive territory. I believe this is a sign that we did make an intermediate top at 1220 and that the SPX is going to have a rough time trying to overcome it.

Market Leaders and Sentiment

As the rally has progressed, sentiment -- according to the SentimenTrader (courtesy of same) -- has deteriorated from its extreme bullish position of a couple of weeks ago, but is still predominantly bullish. This should tell us that the rally is probably not quite over, and this basically agrees with the cyclic configuration and the position of the daily indicators.

Two weeks ago, the following indicator (also courtesy of StockCharts.com) was very bullish and showed the strong relative strength of the NDX vs. SPX. Currently, the bullishness has been tempered to neutral and perhaps is even a tad bearish. This basically agrees with sentiment and the daily indicators that the shortterm rally is near its end, but is not necessarily over just yet.

Gold

After a short period of consolidation, GLD made a new high last week. This is not surprising since we have a potentially higher target for it, perhaps as high as 128. That target is reinforced by the P&F pattern of the recent correction which also has a projection count to 128, which makes the achievement of that level very likely.

Negative momentum divergence has begun to appear in the indicators of both the daily and weekly charts. If it is still there by the time the 128 target is reached, it will not only confirm the end of the move but, because the weekly chart is involved, it could indicate the need for an intermediate correction. Since the structure of the weekly chart also suggests that it might be complete at that level, one should not ignore the 3 confirmation signs of a top: projection achieved, divergence, and structure completion.

Here is the Weekly Chart of GLD:

The correction target will be discussed after the final intermediate high has been reached.

Summary

Near-term, the SPX appears to be ready for a brief consolidation. Based on the prevailing cycles, this should be followed by a resumption of the uptrend with a potential final short-term destination of about 1137.

A correction should then take place as the 2-yr cycle makes its low; after which there should be another final rally into late August, followed by a substantial decline into the 4-yr cycle low in the Fall.

If precision in market timing is something which is important to you, you should consider a trial subscription to my service. It is free, and you will have four weeks to evaluate the claims made by the following subscribers:

Awesome calls on the market lately. Thank you. D M

Your daily updates have taken my trading to the next level. D

… your service has been invaluable! It's like having a good technical analyst helping me in my trading. SH

I appreciate your spot on work more than you know! M

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

6 Critical Money Making Rules