Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

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

Stock Market Short-term Top

Stock-Markets / Stock Markets 2019 Mar 25, 2019 - 08:30 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – Is the long-term trend resuming? Is this a B-wave?  Too early to tell!

Intermediate trend –  Need more time and data to assess the market’s intermediate action.

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

Stock Market Short-term Top  

Market Overview

Last week Ipointed to the relative weakness which had developed between SPX and some leading indexes such as IWM and XBD, all of which have a good track record at calling market tops.  For a few days, I thought that the market was going to prove me wrong -- but not for long!  By Friday, it was all over and my prescience was rewarded with a 54-point drop in the SPX.   It is too soon to call this the beginning of an important correction.  There is not enough of a distribution pattern in the P&F chart to suggest that it is anything more than a short-term decline.  Additional congestion should form below the 2860 level if the topping pattern is going to grow into something indicative of a much larger correction.  Additionally, the daily indicators are still mixed, at best, with the CCI still registering a strong positive value. 

But the weakness which transpired in IWM and XBD on Friday is a clear indication that this is not over.  So, until these two indexes start to behave better in relationship to the SPX, and if weakness is going to continue, it should be in a progressive manner rather than Friday being representative of what lies ahead.

There is also the fact that NDX has been extremely strong relative to other benchmarks.  The Dow, wounded by BA, has been relatively weak.  But
unless NDX has just made a climactic top which does not require a previous distribution pattern before reversing, it may be pointing to a sideways market for a while longer.  I need to see more conclusive market action before issuing a bearish forecast. 

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

SPX daily chart
The bar chart formation suggests that we are not ready for a substantial correction at anytime soon.  The index is likely to trade inside its short-term and longer-term channel before it is ready to have a serious decline.  That would not prevent some severe catalyst occurring as a news item which would cause it to plunge through both channel lines, but barring the possibility of a bus-size asteroid heading for NY next week, I think that prices will continue to move essentially sideways until they are closer to those channel lines, and bounce off them before going through.  In fact, Friday’s decline is likely to find support on the dashed line a few points lower.  We’ll have to see if it simply rebounds and then goes through, or goes on to challenge last Thursday’s high, first.

Should we come down to the bottom of the smaller channel, we’ll also find additional support at the 200-dma.  And if we should break below that, we’ll have to deal with the 50-dma.  In other words, we should not expect anything more than short-term weakness for the next week or so. In fact, we are probably more likely to make new highs before breaking below the 2722 level.  But then, what is IWM telling us and why is it so weak relative to the SPX?  Perhaps it is beginning a larger top formation which will take some time to complete while SPX and NDX rally to new highs over the next few weeks and months. 

Finally, you can see that the strength that still exists in the CCI is not suggestive of an imminent collapse.  Let’s wait another week and see if an asteroid is, in fact, lurking around the corner!

SPX hourly chart

The hourly chart is starting to give the impression that the market is making a rounding top.  (The same trend lines and channels that appear on the daily chart have been reproduced here.)  Friday’s steep decline had already found some profit-takers that held prices for a few hours before it continued into the close.  The index is about to enter a zone of support which consists of previous congestion on the left, and the 200-hr MA at 2788 as of Friday.  That could hold it for a while and cause a bounce which would add a little more distribution to the existing pattern so that we could drop down to the dashed line, below if not to the bottom of the short channel right away.  If this is what lies ahead, we could rally for a couple of days and then drop lower before ending the short-term correction. 

This is what the daily indicators suggest, and the hourly as well.  Although I have not labeled it, some positive divergence is showing in the CCI, and we are close to the dashed red line which could provide support since it is roughly at the target suggested by the above congestion pattern on the P&F chart.  We’ll see what happens on Monday to determine if the market action is suggestive of more immediate weakness.  After all, the decline is only one day old and we should not make too many assumptions this early.

SPX, IWM, NDX (dly)

I have settled on following these three indexes: the strongest, the weakest, and the one in-between.  I believe that this will help to get a better understanding of what the market is doing.  Instead of NDX, I am choosing QQQ which is far less pricey, and therefore easier to track on a P&F chart.  Since I also keep a chart on SPX and IWM, I get a better idea of what each is doing and, consequently, how it translates into overall market action.  Looking at these, I believe that IWM is only giving a warning of short-term weakness at this time.  After another couple of points on the downside, it should be able to stabilize and get back into an uptrend, or begin to form a larger distriution pattern.  For now, I believe it is leading the market into a short-term consolidation rather than something more dire.

UUP (Dollar ETF) (daily)

UUP appears to be making a top.  It took a hit after the FOMC report and has rallied, but the chart pattern is beginning to suggest that any subsequent upside will be limited.  By next week we should get a much better idea; but breaking below the short-term double bottom (red trend line) would suggest a test of the 200-dma with a decent chance of breaking it. 

 

GDX (Gold miners ETF) (daily)

GDX is beginning to look a little more bullish than it did.  If it can limit the next pull-back to the uptrend line/50-dma support below, AND, if UUP is, in fact, ready to start a correction, then GDX will be ready to extend its move to the top of its broad channel (top heavy black line) over the short term and later, if UUP starts a deeper correction, to about 30.

 ACB (Aurora Cannabis) (daily) 

I have replaced Canopy Growth with Aurora Cannabis which is also a leader in the industry.  It appears to have a better percentage move ahead since it has a potential P&F target to  about 13.50/14.00 over the relatively near term.  It seems to move with the market, and if the market has a short-term correction ahead, it could consolidate a little more before moving higher. 

 

BNO (United States Brent Oil Fund) (daily)

BNO pushed a little higher but has reacted to Friday’s market weakness and may have to wait until the near-term market correction is over before reaching for its 200-dma and overhead resistance, in preparation for a longer consolidation.

 

Summary

Friday’s market weakness, as violent as it was, is more suggestive of a consolidation than the beginning of a deep correction.  But hazarding a market forecast after only a one day decline is probably foolish!  Let’s let the market define itself over the next week or so. 

 FREE TRIAL SUBSCRIPTON

With a trial subscription, you will have access to the same information that is given to paid subscribers, but for a limited time period.  I think you will find that knowing how far a move can carry is one of the most useful benefits of this service, whether you are a trader or an investor -- especially when this price target is confirmed by reliable indicators which give advance warning of a market top or bottom.  Furthermore, cycle analysis adds the all- important time element to the above price projections. 

For a FREE 4-week trial, further subscription options, payment plans, and for general information, I encourage you to visit my website at 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