Near-Term Objective Reached

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. Where we go from here and how far will be gauged after the September-October correction. 
  • SPX Intermediate trend: Potential intermediate correction in progress.

Near-Term Objective Reached

  • P&F: Short-term projection: 3300-3260 - Objective reached on September 18 with SPX 3292 intra-day low.
  • Cycles: Looking ahead! 90-year cycle – last low: 1932. Next low: 2022.
  • Seven-year cycle – last low: 2016. Next low: 2023.
  • 20-td – September 17 - bottomed on September 18.
  • Nest of short-term cycle lows on about October 15-20.

Market Analysis: SPX-TRAN-IWM daily charts

Both TRAN and IWM showed relative strength to SPX last week, suggesting that we should start to rally. This would make sense since a short-term cycle apparently bottomed right on time, on Friday, September 18.

The relative strength of TRAN to SPX is far more positive than IWM’s. I am not sure if this has implications for the longer term. I have not followed this aspect of their relative strength long enough to come to a firm conclusion. I assume the days ahead will make this clearer. 

SPX daily chart  

Since the decline from the 2588 high, the daily trend has shifted from the blue channel to the green channel. The green channel is divided into sections which are anchored at various previous lows. The first parallel, which coincided with the 50-dma, did not hold and was breached by the bottoming of the 20-td cycle which made its low on Friday at the suggested short-term P&F target.

This allowed for the next parallel close below to hold and provide a rally, which could climb back above the 50-dma and repair some of the damage -- temporarily. With the nest of cycles due in mid-October, it is likely that after the upward phase of the 20-td has exhausted itself, the decline will continue.  

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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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