Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Stock Market Increasing Technical Weakness

Stock-Markets / Stock Markets 2019 Jul 22, 2019 - 11:19 AM GMT

By: Andre_Gratian

Stock-Markets

Current Position of the Market

SPX: Long-term trend – Finallong-term phase on the way?  How much longer, is the question.

Intermediate trend –  The continued strength has muddied the water and we may have to wait until August/September before the intermediate trend becomes more clear.

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

Increasing Technical Weakness 

Market Overview

Last Monday, SPX Made a new all-time high at 3017.80 in a “last hurrah” attempt at keeping the bullish uptrend goingBut it came with signals of trouble ahead.  Besides its failure to rise to the top of the bullish channel from 2728 (which was a classic sign of deceleration), the strongest warning came from the A/Ds daily pattern which was thoroughly discussed in last week’s letter.  I pointed out that it was forming an ominous pattern which, in the past, had normally led to an important correction.  In addition, this was the third such warning since the low of 2346, making it all the more serious because in the market, things often come in threes with the third repetition marking the end of the prevailing pattern. 

Last week’s action shows that the uptrend is in trouble.  On Monday, the opening thrust was the high of the day and marked the beginning of a 43-point decline engineered by the short-term cycle which had been thoroughly discussed in the past two weeks, but was delayed by the probability of a rate cut at the next FOMC meeting (7/30-31).  On Thursday, another mention of that rate cut created a sharp 70% retracement of the decline which served as a retest of the high.  But on Friday, weakness resumed and increased materially with the index closing on its low of the day and continuing with more selling in the futures after the close.  It would take some sort of technical aberration to prevent SPX from opening lower on Monday! 

The next two or three weeks will be a defining period for the market which, at this time, favors the bears.  

Technical Analysis (Charts appearing below are courtesy of QCharts.)

The intermediate trend deceleration is becoming more obvious as each week goes by.  Starting from 2346, SPX moved up at a sharp angle until it reached 2820, and then had its first 100-point correction.  This allowed us to establish the parameters for the blue channel.  Prices then continued to move up, but at a less steep angle, until they reached 2854 and started a deeper correction which took them outside of the blue channel.  We were then able to draw the top and bottom lines of the purple channel which is much wider than the original one.  From 2854, the index corrected until it retraced exactly .382 of the entire rise from 2346 before turning up again and moving even higher, finally creating another top last Monday at 3018.  If, as I expect, the fledging decline expands into a full-blown correction, the 3018 top will have ended the third phase of deceleration since the move started at 2346.  3018 fell far short of the current purple channel top line and I would not be surprised if this correction took the index outside of the channel entirely before it ends.  I have drawn a red trend line connecting the 2954 and 3018 tops because, even though the entire uptrend is not shown on the chart below, this helps us to visualize the formation as a large rounding top which is just beginning to roll over.  This is deceleration on a large scale which portends a significant correction just starting.  I have also established a new red channel by drawing a parallel to the top red line, and I suspect that this decline, if it continues lower past the end of the month will not only take us outside of the purple channel, but even below that lower red channel line. 

This correction would be consistent with the cycles expected to bottom in August/September.  On Friday, the oscillators all closed negative for the first time since early May.  It’s possible that we are starting a similar and perhaps larger correction, but only if we first break out of the dashed blue channel over the short-term.  The current minor cycle which is supposed to bottom on Monday/Tuesday should take us to about 2950 before causing a rebound into the end of the month.  A resumption of the decline after that date should next bring us down to challenge the 50-dma.  I have marked on the chart the approximate index action I expect to see over the next couple of weeks.  This market activity would bring additional congestion (distribution) in the topping area and give us a better estimate of how far the correction could extend.

SPX daily chart

 

SPX hourly chart

SPX topped early Monday at 3018, drifted sideways for the rest of the day, and started an initial correction on Tuesday which was interrupted by a sharp rally after touching 2975.  I briefly thought that the cycle low due next week might have come a little early, but Friday’s retracement which continued into the close and was followed by continued selling in the futures suggests otherwise.  There is a near-term P&F count to about 2950 which looks like an appropriate target as it fulfills the rest of the cycle down-phase.  That’s also the junction of trend and parallel lines which should arrest the decline.  The opening gap of 7/1 may also get filled at that time.

The cycle low should next bring a rebound which could extend into the FOMC meeting at the end of the month.   Next, SPX will have to prove that it started more than just a downside blip after making a new high at 3018.  It will have to roll over once more, and this time break below the lower line of the channel represented by the two blue dashed lines.  Only after doing so will it confirm that it is now on its way to an August/September low. 

QQQ, SPX, DJIA, IWM (weekly)

Last week marked the collective reversal of all four indexes, except for the fact that IWM did so from a much lower level while even increasing its relative weakness to the rest of the group; thereby putting into considerable doubt the validity of the view that the market is going to continue with its bullish ways.  I have drawn a red “channel” on the first three charts which duplicates the one drawn on the daily chart.  It seems that IWM already created the same red channel several weeks ago, but at a much lower level.  Furthermore, it has already fallen through the lower channel line; although it did rally into it as the other indexes all made new highs.  During this process, a much weaker IWM remained within the confines of its larger descending red channel.  This pronounced, relative weakness significantly increases the risk of a significant correction directly ahead.

 

UUP (dollar ETF) daily

Last week, UUP sold off sharply on Thursday and climbed right back up on Friday.  Next week should determine the short-term direction.

 

GDX (Gold miners ETF) daily

The chart posted below includes phase counts derived from the base which GDX has just completed.  The entire base calls for a move to 61, but this is not something that is going to take place next week, or even this year.  In the meantime, the short-term counts are working well and we could get up to about 31-32.50 before GDX completes this bullish phase and has a significant consolidation. 

ACB (Aurora Cannabis) daily

ACB has been making small upside probes to see if it is ready to end its intermediate consolidation, but they have all been turned back.  5.50 is possible before the end of this decline.

 

BNO (U.S. Brent oil fund) daily

BNO has ended its short-term rebound.  A deeper pull-back is expected now that it has moved back below its MA cluster.

Summary

After being stymied by discussions of a rate cut at the next FOMC meeting (7/30-31) the minor cycle has regained control and is expected to drive prices lower into Monday/Tuesday.

Andre 

FREE TRIAL SUBSCRIPTON

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