Approaching Initial Objective

Current Position of the Market

SPX Long-term trend: For now, the best guesstimate is that we are still in the bull market which started in 2009.

SPX Intermediate trend: A potential intermediate correction is in progress.

Approaching Initial Objective

  • P&F: Short-term projection: 3300-3260.
  • Cycles: Looking ahead! 90-year cycle -- Last low: 1932. Next low: 2022.
  • Seven-year cycle -- Last lows: 2008-2016. Next low: 2023.
  • 20-td – September 17.

Market Analysis - SPX-TRAN-IWM daily charts:  

The most significant change in last week’s charts is that the TRAN has improved its strength relative to the SPX. This should mean that this is not a market top, but a correction in an uptrend. IWM was in step with the SPX and does not forecast any change in the trend.

This is the best correction since June, and some technical factors suggest that a low of sorts could come next week. More time will be required to learn exactly what kind of a low.

SPX daily chart  

Last week, the SPX made a new correction low, found support on the first parallel green line, and bounced. In the process, it broke outside of the blue channel, but not by much, and it may hold ~3000, which should be a strong support level combining the parallel line with the 50-dma.

In addition, it is also the level of the short-term P&F projection from the top (3260-3000). Another factor is that 3275 is a 50% retracement of the uptrend which started with the June low of 3067. These three factors combined provide a reasonable case for a low to be made in that area, especially since it is reinforced by a short-term cycle bottoming on about September 17.

Although the momentum oscillators are still negative, they showed some deceleration and the A-D oscillator managed some positive divergence. Therefore, a rally starting next week is possible and even likely, but what kind of a rally will it be? If it is only a rally to the broken blue channel line, followed by more weakness, we will have the option of stopping at the current low, or going lower.

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Charts courtesy of Qcharts.

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 ...

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