Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Soybean Price Hits 9 Year Low Due to Trade War - 24th Jun 18
Small Cap Stocks, Technology and Pharma To Drive A Renewed Market Rally - 24th Jun 18
Gerald Celente: Why You Still Need Guns, Gold, and a Getaway Plan... - 23rd Jun 18
Cheap Gold Stocks Bottom Basing - 23rd Jun 18
A Trade War Won’t Be Good for the US Dollar - 23rd Jun 18
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Stock Market Bulls Still in Charge

Stock-Markets / Stock Market 2017 Oct 09, 2017 - 10:18 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX Long term trend:  Continues to make new highs with no sign of a major top in sight.

SPX Intermediate trend:  A re-accumulation phase at the 2500 level has produced higher counts which should provide higher prices before a reversal takes place.

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 discuss 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 anvi1962@cableone.net

 

  • Bulls Still in Charge

Market overview:    

After reaching 2508, SPX consolidated for a few days down to 2489, and when it failed to go lower but broke above 2510 instead, it identified the correction as a re-accumulation pattern which carried a potential count to about 2575.  I thought that there would be a phase consolidation taking place  between 2530-2540, but the index continued to march higher to the next phase count of about 2550 which was reached last Thursday.  Friday’s job report was an occasion to take some profits, as well as to acknowledge a minor cycle low which I initially thought would surely come a few days earlier.  Although the index started to move back up on Friday after a correction of only 7 points, it’s unclear if the cycle has made its low (Friday being the ideal date) or if it will extend into early next week.  If so, it could reach down to about 2540 before resuming its uptrend toward the higher projection. 

There has been so much momentum behind this move that the daily oscillator, which had shown some divergence at the 2508 top, went on to make a new high by a small margin, thereby eliminating the divergence entirely.  This should lead to a higher high, whether we go up from here, or correct a little more first.

In this super-bullish short-term atmosphere, the fear and greed index made a new “extreme greed” all-time high of 95 (max. 100), telling us that the market is as short-term overbought as it ever gets. 

Analysis: (These Charts and subsequent ones courtesy of QCharts.com)

  • Daily chart 
  •  
  • It takes a lot of buying to push through the top of a channel which has contained prices for a little over six months!  As the index stubbornly refused to come down, those sitting on the side lines became more and more fidgety and finally could not resist the temptation of jumping on board. It also most likely took the assistance of massive short-covering to do so.  Once in a while, large traders have an opportunity to keep prices in an uptrend until both of the above occur.  This was (is) one of them. 
  •  
  • As stated above, it is almost inconceivable for a market that has so much upside momentum to make a top at the same time as its oscillator peaks, without first creating negative divergence.  That, and the fact that higher counts can be derived from the last re-accumulation pattern, practically assures us that after this minor correction is over, a new high will be seen in the SPX.  Friday’s action also tells us that this is unlikely to be a blow-off move.  These go straight up and then come straight down without forming any congestion at their highs.  However (and there is always a “however”), should prices begin to retrace too much, say below 2532, we should be on the alert for selling beginning to feed on itself.  If the correction that started on Friday continues, a retracement down to 2540-41 should take place unless we spend more time extending the existing distribution pattern first, to create a lower count.  But it is not likely that a 13-wk cycle whose low was due Friday, and is still declining, would allow this to happen; so we are either done and ready to extend the rally, or we should see lower prices first thing Monday.  
  •  
  • Although weakness is nowhere to be found in the momentum oscillators, this is not the case with the A/D indicator which not only retained its negative divergence, but went lower on Friday. 
  •  
  •  
  • Hourly chart
  •  
  • Very unusual for the last 63 points of a 134-point uptrend to have only 3 or 4 point pull-backs along the way.  This is the sort of thing that you find at the beginning of a bull trend, not after all these months have passed since the 1981 low.  It probably does foreshadow the ending of the trend, but is not quite the blow-off pattern that many expect.
  •  
  • As you can see on the chart, shortly after the trend from 1489 started, the hourly CCI went green and stayed green, its negative divergence being ignored and overcome (as in the daily charts).  There are two open gaps in that last stage and a deeper correction than we had on Friday could retrace down to fill the top one, or stop at the upper end of the gap.  We’ll have to see. 
  •  
  • The hourly prices also traced out a good channel in the last stages of this advance, and stopped on its top line.  Again, since we went all the way to the top (as well as having gone through the top line of the daily channel), it is very likely that we have not seen the high of the move, but will probably extend the minor correction and make the next high with deceleration showing in  the daily oscillators.
  •  
  • An overview of some important indexes (daily charts)
  •  
  • With all the indexes below making new highs, there is no sign of a top yet, although QQQ’s (bottom right) lagging action could be an early warning.  Next week should give us better clues about what to expect, near-term.  If 2575 is the next important target for SPX to reach, some advance notice should be given by TRAN and IWM (second and third on bottom tier), along with QQQ.
  •  
  •  
  • UUP (dollar ETF)
  •  
  • After a lengthy and deep correction, UUP has found a low and is ralying.  It is unlikely to progress very far without first creating a good base, and it is already finding resistance at its upper corrective channel line.
  •  
  •  
  • GDX (Gold Miners ETF)
  •  
  • GDX successfully re-tested its low after finding some ready buyers, last week.  Since it has started a higher low/higher high pattern over the near-term, this move could have farther to go.  Note, however that the daily oscillators will have to become positive before we can expect a serious uptrend to take place.  This is most likely reserved for the end of the year since two dominant intermediate cycles will be bottoming about two weeks apart in early December.
  •  
  •  
  • USO (United States Oil Fund)
  •  
  • USO found resistance where expected and has reversed.  So far, it is only back-testing its broken channel line, but if it fails to make a new high and re-enters its corrective channel, it could be suggesting that it will re-visit its lows --  and perhaps more!
  •  
  • Summary
  •  
  • SPX failed to take a breather at the 2530-40 phase count derived from the re-accumulation pattern created at the 2500 level.  Instead, unusually strong upside momentum which drove the fear and greed index to new, super greed highs marched on to the next count of 2550.  After a minor correction, the index is expected to complete its rally from the 2500 low at about 2575 and start another consolidation/correction.
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

© 2005-2018 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