Current Position Of The Market: SPX, Money, Metals

Current Position of the Market

SPX Long-term trend:  There is some good evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before coming to an end. 

SPX Intermediate trend:  SPX is not likely to end its intermediate trend until it reaches about 4150.

Near Correction Low

Cycles:  Looking ahead!  90-yr cycle – last lows: 1843-1933. Next low: ~2023.  

7-yr cycle – last lows: 2009-2016.  Next low: 2023

Market Analysis (Charts courtesy of QCharts) 

The current correction is affecting both indexes equally.  For this reason, and because the P&F count suggests that we should move higher before reaching an intermediate top, the odds favor this retracement to be only a short-term consolidation which is nearly over.

SPX daily chart

After reaching the top of its intermediate channel two weeks ago and drifting across the small blue channel -- moves which produced negative divergence in the daily oscillators -- SPX looked ready for a short-term correction.  This was made all the more probable by the fact that the index had reached the P&F projection of 3950 which had been generated by the congestion pattern formed at the former short-term low.  Trading outside of the blue channel signaled that the correction was about to begin.  

During the past week SPX corrected 160 points, reaching 3790 on Friday before rebounding after touching the bottom intermediate channel line.  The price recovery fell just shy of the normal .50 retracement of the decline from the previous high and the index spent the rest of the day in a trading range, but additional selling into the close suggests that the correction is not quite over.  

If Monday brings about a new low to 3780, the correction could end quickly.  This is the preferred scenario!  If there is continued weakness, we could drop down to about 3700 before bottoming, but if the selling is over on Monday, the odds favor starting a new uptrend to a new all-time high.  The near-term forecast still calls for a move to about 4150 before reaching the level at which a more important top will form.

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