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
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Developing Topping Pattern Over the Summer

Stock-Markets / US Stock Markets May 29, 2007 - 06:30 PM GMT

By: David_Petch

Stock-Markets The decline in the S&P 500 and other broad market indices likely was a shot across the bow for what lies ahead later in the year. Technically the S&P could have completed the move up, but technical evidence suggests that a topping formation will develop over the course of the summer before a sharp decline in September/October.


The upper 55 MA Bollinger band is still rising, suggestive a top has not yet been confirmed; the lower 55 MA BB has curled up to confirm a top is in so at some point over the next few weeks, the upper 55 MA BB should curl down. Notice how low the lower 55 MA BB is in relation to the lower 21 and 34 MA BB's; given the depth, it is unlikely that we are going to witness a crash but rather a topping formation lasting until late August/September.

Fibonacci time extensions of various waves are shown mid chart, with September 24 and 25 overlapping. This overlap sets up the possibility for a point in the future where the S&P begins to break down. Short-term stochastics have the %K beneath the %D, with a negative divergence that has persisted for the past 7 weeks. Given the technicals, it appears the S&P has further downside to approximately 1480 before grinding higher and remaining range bound over the course of the summer.

Figure 1

Red lines on the right hand side represent Fibonacci price projections of upward trending wave price action projected off their subsequent lows. Blue lines represent Fib price retracements of the move from the March low until the recent high. Areas of line overlap form Fib clusters, which indicate important support/resistance levels. The S&P has found support at a Fib level, with a lower Fib cluster around 1480 (the likely low for the current decline). Moving averages are in bullish alignment (50 day MA above the 155 day MA above the 200 day MA), with the 50 day MA acting as support at 1477.02.

Full stochastics have the %K above the %D with no sign of a crossover. When a crossover occurs, it will indicate a top has firmly been put in place. Given the powerful uptrend in the S&P, it makes stating a definitive top is in place impossible. Minimally, the pattern presented in Figure 4 is complete, but the pattern could develop into a complex triangular formation. Many people are now trading the S&P at the same angle and when this occurs, the complexity of the patterns only rises. I still would not recommend anyone short the market because the whipsawing action could result in substantial short-term losses. Playing with puts, calls or shorts should only be done with money you would use on a trip to Las Vegas.

Figure 2

The weekly S&P 500 chart is shown below, with Fibonacci price retracements of the decline shown on the right hand side (denoted in blue). Notice how the S&P has moved within Fib channels since late 2003; every time the S&P broke to a higher Fib level, it eventually back-tested the breakout before going higher. The S&P fully retraced the decline from where I start the Elliott Wave count, further confirming the move likely has terminated. Just because the S&P has put in a top does not necessarily mean a crash is going to occur.

Figure 1 showed how low the lower 55 MA Bollinger band was relative to the index indicative a topping formation is likely to develop. The lower 55 week MA Bollinger band is at 1168.68, down from last week's value of 1170.97; there is no confirmation with the weekly lower 55 MA BB that a top is in (it likely will be a lagging indicator). Full stochastics have the %K above the %D within the confines of a rising stochastic wedge. Should the %K fall beneath the %D, it will confirm a top has been put in place.

Figure 3

The mid-term Elliott Wave chart of the S&P 500 Index is shown below, with the thought path indicated in green. I have not provided any labeling scheme for the current decline due to there being 5 distinct ways of labeling the pattern. The S&P should decline to around 1480 before bouncing higher. Expect the S&P to remain within a trading range of 1400-1550 over the course of the next 2-3 months before a fall correction. If the S&P has an impulsive move from 1480 to 1450, then that would require the mid-section of the chart to be labeled as a flat (3-3-5) (the current move up would represent the terminal portion of the flat). The S&P pattern is extremely complex, so if one has a hard time following this, no worries, just remember the possible ways the pattern can develop.

Figure 4

The long-term Elliott Wave chart of the S&P 500 Index is shown below, with the thought pattern forming denoted in green. The expected pattern is a topping formation and I am still formulating how to label the lower Degree pattern. Due to the minimum of 5 different ways to label the pattern, it suggests it is not yet complete. The Elliott Wave count up to Minor Degree (denoted with pink lettering) is accurate, but the lower Degree must be kept in an open reading frame until further wave structures better define the pattern.

Figure 5

By David Petch

http://www.treasurechests.info

The main focus of my work pertains to analysis of the USD index, S&P 500 Index, 10 Year US Treasury Index, AMEX Gold BUGS Index and the AMEX Oil Index using market analysis specified in a former article I wrote titled “The Technical Palette” (Elliott Wave, Bollinger bands, stochastics). We also cover around 30-40 gold/silver, base metal and energy stocks, which have done quite well recently. If this is the kind of analysis you are looking for, we invite you to visit our new and improved web site and discover more about how our service can further aid you in achieving your financial goals. For your information, our new site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover. And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Copyright © 2007 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.


© 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