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.
SPX: Intermediate trend - The counter-trend rally which started in March is now coming to an end. The objective for a high is being reached and deceleration is becoming apparent. If the top has not already been reached, it should be, shortly!
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 determines 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 .
Overview:
Signs that the rally from 667 may be coming to an end are appearing. The newsletter of 7/20 stated the following:
"There are now two potential projections for the high in the SPX: 962 and 1000. We'll have to decide which of the two will work best as we move forward".
Last Thursday, the SPX traded at 996.68 which is very close to the higher projection then backed off, closing on Friday at 987.30.
That alone is not convincing enough that we have seen the high, but next week should give us some additional confirmation since the time projection was given as the end of July into the first part of August. Furthermore, between 7/23 and 7/29, the consolidation made by the index established a Point & Figure count which has the potential of reaching all the way to 1020. 996 was only the half span of the potential count. Whether or not we go higher will depend on how much weakness there is on Monday's opening. If the opening thrust takes prices below 980, it will increase the possibility that Thursday was the high of the move. A move below 976 with hourly A/D's in excess of -1500 would make it even more so.
In spite of its appearance and points gained, there are a number of signs that the move from 667 was not a particularly strong move, especially the "C" wave (?) which is currently ending. The volume has been on the weak side, and the entire pattern is beginning to look like a wedge which is approaching a .382 retracement of the decline from 1576. Everything considered, there are a lot of reasons to believe that we could be nearing an important top. Let's look at individual charts!
What's ahead?
Chart Pattern and Momentum
The weekly chart clearly shows why we have arrived at some important resistance from a number of different sources: there is a former top from 11/4/08, a top channel line (black dashed line), .382 retracement of the decline from the October high, and the top line of the wedge which is being formed from the 667 low. This should be good enough for at least a pull-back! In addition, consider that the top indicator is very overbought and that the lower indicator is beginning to show negative divergence in the histogram. Not to mention the other reasons given in the opening remarks.
On the other hand, if we continue to move up from here, we will have to revise our entire potential scenario for a top.
The daily chart (below) is showing some of the same characteristics as the weekly: Overbought momentum oscillator and divergence beginning to appear in the histogram, but the most weakness is showing in the A/D oscillator which has plenty of divergence to the price and to the momentum oscillator. The SPX is hitting resistance created by the top wedge line (red) and the extension of the former trend line (dashes). It is also trading outside of its narrow up-channel. All that is needed for a confirmed sell is for the price to close below the red horizontal line which is roughly at 967.
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