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 Is the Winner of the U.S. Presidential Election - 31st Oct 20
Gold and Silver Prepare For Another Price Advance - 31st Oct 20
Gold Is Likely to Win This Election - 31st Oct 20
Why Trump Can Still Win 2020 Election - Establishment Mainstream Media Wrong Again? - 31st Oct 20
Why Budgies Need their Own Feeders - Parakeets Feeding UK - 31st Oct 20
Can Trump Still Win? US Presidential Election Forecast Matrix 2020 - 30th Oct 20
Why a Biden Win will Keep Metals Prices Rocking - 30th Oct 20
Is Silver the Next Bitcoin? - 30th Oct 20
A New World Monetary Order Is Coming - 30th Oct 20
Do These Explanations Make Sense for This Intraday Stock Market Turn - 30th Oct 20
US Presidential Election Forecast Matrix, Stock Market Uncertainty - 29th Oct 20
Stock Market Turning? Look For These Support Levels - 29th Oct 20
Silver: A Conceivable Dead-Cat-Bounce on the Cards - 29th Oct 20
Stocks are Strong but be Aware of this Continuing Pattern - 29th Oct 20
The Most Profitable Way To Play The Gold Boom - 29th Oct 20
Why You Should Hire An Accountant To Complete Your Tax Return - 29th Oct 20
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Sluggish New High

Stock-Markets / Stock Markets 2018 Aug 27, 2018 - 03:54 PM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – The bull market is continuing with a top expected in the low 3000s.
 
Intermediate trend –  Limited uptrend
 
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

A Sluggish New High 

Market Overview 

Last Monday, SPX traded up to 2873.93 before reversing.  For all the fanfare about achieving a new all-time high, this surpassed the January high by less than a point!  The index had a shallow correction for the rest of the week and, on Friday, it made another new high to 2876.16, surpassing the former high of last Monday by less than three points.  It should also be said that this level was reached halfway through the session and minor consolidation ensued for the rest of the day instead of pushing ahead aggressively. 

NDX tacked on a decent 72-point day, but remains 25-points below its former all-time high which was reached on 7/25, and IWM, which made a new all-time high when it broke out of a 5-week consolidation phase four days ago, did make a new high, but only by a fraction.  As for DJIA, although it had a 133-point day, it is still a laggard index by a fairly wide margin. 

It is important to point out that the volume is drying up; even in the indexes that are making new all-time highs.  The last time I checked my TA-101 manual, this is considered bearish.  So what’s going on?  Well, for one thing, September and October are considered to be the worst months of the year for stocks, and that can hardly be motivation for traders to buy aggressively.  Secondly, there is a 20-wk cycle bottoming in that time frame.  And also, since nothing was achieved during the trade talks between US and China and, since Trump’s next move to impose another 200 billion dollars in tariffs on China could be implemented as early as next month, a little caveat seems appropriate.

It does not mean that we can’t go a few points higher, but starting next week, one should start erring on the side of caution instead of heeding the call of bullish sirens. 

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

SPX daily chart

SPX started an uptrend after the January correction came to an end; and last week a new all-time high was created (twice) – but on much reduced volume.  The fact that the index could only scratch out a minimal new high on a drop in volume can hardly be considered bullish and, unless this condition is radically altered in the next few days, a new correction should soon be on the way. 

As you can see on the chart, the uptrend is nearing the top channel line which has contained prices ever since it began.  Considering the conditions under which we are again approaching it, we should not expect a dramatic move through the top, which would be required in order to change the market mood.  Add to this the profuse negative divergence which appears in the bottom oscillators, and the fact that we are days away from entering the most bearish period of the year for stocks, there is little more to say.  Only the most hardened perma-bulls can remain optimistic under these conditions. 

Still, “it ain’t over ‘til it’s over!”  So, let’s see how much more of the grind materializes over the next few days. The last consolidation which took place above 2855 this past week promises a few more points on the upside, so let’s not rush the market.  For a confirmed reversal, we would need to break the short-term trend line from 2802, followed by a move below 2854 on negative breadth.  And, to made sure that the incipient decline has legs, all daily oscillators should turn negative as well.  Incidentally, negative divergence is not confined to the daily indicators.  It is beginning to show up in the weekly ones as well. 

 

SPX hourly chart

The hourly chart gives us a different perspective. On it, SPX is not nearing the top of the channel (which is the heavy line at the top), but a parallel to that  top line which is also expected to provide resistance (if not that one, then the next dashed line above).  For a reversal to occur, shortly afterward the index would have to break below the minor uptrend line and continue below 2853 and lower. 

Since the 20-wk cycle is expected to make its low at some time between late September and mid-October, if the correction did last into that time frame, one would have to assume that the 2800 level would stand a good chance of being broken.  And, if so, we can get some idea of the decline’s extent  based on the amount of distribution that will have been created above 2800. 

I am not saying that this is exactly how things will progress over the next month or so but, based on the current market action, and assuming that the 20-wk cycle low is only four to six weeks away, that would be a pretty logical scenario to entertain.

The oscillators at the bottom of the chart do not look ready to issue a sell signal, and that allows for price to move a little higher before it reverses.

 

SPX, NDX, IWM (daily)

I have added DJIA to get a better idea of how these principal maket components relate to one another over the short term.  Keep in mind that since January, only two of them, SPX and IWM  have made a new all-time high.  The DJIA is the biggest laggard and it was also the only index which did not surpass Monday’s high on Friday while NDX, which was the first to make a new all-time high has now fallen behind the others, near-term.  This lack of short-term coherence is probably not a big deal as long as all four are still essentially in an uptrend.  But what is, is the volume pattern (which could only be provided for the last two).  Notice how it has been falling over the past few days.  This is of particular concern in IWM which is historically one of the most reliable market leaders.  It was the first to make a new all-time high, but it has not been able to really follow through this past week, and now the volume is dropping off sharply. 

We’ll give the market a little more time and with each day, it should become more and more revealing.  If what I just pointed out has any meaning, market weakness should materialize over the near-term.

UUP (dollar ETF) daily

UUP reversed soon after reaching its 25.50 projection.  Whether or not this is a short-term correction, the initial pull-back may be limited to about 25.00, after which the index will either consolidate to go higher, or go sideways for a while before starting a bigger downtrend.


GDX (Gold miners ETF)

GDX found support at the bottom of a large channel at the level of its 10/16 52-wk low.  It may have to do some work in this area before it is capable of making much of a recovery and, in any case, its action will still essentially follow that of UUP’s (but in reverse!). 

USO (United States Oil Fund)

USO had a good bounce over the past few days but is unlikely to embark on a continuation of its longer-term uptrend without additional consolidation which should at least retest its recent low.

Summary

On Friday, SPX made another new all-time high, surpassing last Monday’s by less than three points on sharply diminishing volume.  This lack of upside momentum combined with low volume as the index is making all-time highs is not bullish. Unless the action improves quickly, this is more likely to be the sign of a market top rather than that of a strong advance, and it could signify that traders are not intending to chase prices much higher as we enter the two worst months of the year for stocks.

A reversal at this time would not necessarily be considered the top of the bull market.

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

© 2005-2019 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