Stock-Markets
Best Financial Markets Analysis ArticleCurrent Position of the Market
SPX: Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2012-2014. This would imply that much lower prices lie ahead. SPX: Intermediate trend - The counter-trend rally which started on March 6 is still up, but losing momentum. Red flags are appearing in the A/D and the sentiment indicator. These are signals that normally precede a reversal. 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 .
Overview:
The bear market secondary reaction is still intact, but it is losing momentum. A sideways consolidation in the SPX started on May 11 and lasted about two and a half weeks. After breaking out to a slightly higher level, the index quickly went back into another sideway pattern and closed on Friday only 16 points higher than where it was a month ago. There are now red flags appearing in several indicators which should lead to another pull-back or even to a full-fledged reversal. These red flags warn that each rally is now being met by more and more sellers, and the SPX will soon be in a position to challenge its uptrend line, as you will see on the charts, later. So far, the pull-backs have been gentle, coming in the form of shallow consolidations. At some point, one will turn into the beginning of a downtrend. The SPX has been traveling in a well-defined channel, so it should not be too difficult to identify when the trend has shifted. On Friday, it came very close to its uptrend line from the March low. There is a good chance that it will be broken next week, which would be more serious! Longer-term cycles favor a continuation of the uptrend into July, with the Bradley date of July 15 as a good target for a final high. How much higher? We will be better able to estimate this after the coming correction.
There are still many Elliott Wave analysts who think that this uptrend from March represents wave 4 of the decline which started in October 2007, and when we turn down, we should be going for new lows. With investor psychology having shifted more and more to the bullish side, it is becoming more difficult to conceive. But if this is still a bear market -- which I am convinced it is -- we have to make new lows! So, be prepared when this trend turns down decisively.
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