Stock Market Master Cycle Top May Have Extended to Mid-January
Stock-Markets / Stock Markets 2015 Dec 29, 2014 - 02:43 PM GMT
On Friday, SPX closed beneath its hourly ending Diagonal formation. As I write, the SPX Premarket is down another 6 points. This doesn’t guarantee that it will open there, but it means that the market will bear watching this morning.
Although the Master Cycle which started April 11 was 250 days old at the time of the December 17 low, it may not be finished yet. The reason is that Master Cycle bottoms usually require more than a 7-day rally afterwards. In addition, the next major Pivot is a Primary (Panic) Cycle low due January 13-15, giving a more appropriate low for a Master Cycle. Finally, there is no other Master cycle low due until April, so an extended Cycle (277-279 days) here makes sense.
This top may be considered to be point 5b in the Orthodox Broadening top pattern. Point 6 must exceed the October 15 low at 1820.66 by at least 3-4% and may often go deeper. I estimate that the decline may go as low as 1700.00-1725.00 in the next 13 market days to complete Point 6 of the Broadening Top formation before a sizeable bounce occurs. A 50% retracement is usually called for, so a bounce from 1700, for example, would land just under 1900.00 and raise the probability of being stopped at the lower Ending Diagonal trendline.
VIX appears to be challenging its Intermediate-term resistance at 14.95 in the Premarket. Rising above it would give an aggressive sell signal.
Despite the SPX turning down at the end of the day, the NYSE Hi-Lo index actually closed above its trading bands, cancelling the aggressive sell signal. This may only be a temporary situation which may be remedied after the open.
TNX is still retracing its Minor Wave 1 off the December 16 low. The retracement may be complete after challenging mid-Cycle support at 22.08.
Respectfully,
Tony
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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.
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