Short-Term Decision Time

Current Position of the Market

  • SPX Long-term trend: There is some good evidence that we are still in the bull market that started in 2009. 
  • SPX Intermediate trend: New intermediate uptrend has been underway since hitting 2234.

Short-term Decision Time

  • Cycles: Looking ahead. 90-year cycle – last low: 1932. Next low: 2022.
  • Seven-year cycle – last low: 2016. Next low: 2023.

Market Analysis: SPX-IWM weekly charts

After its high of August 18, IWM began to lag SPX significantly. Since September 20, however, this has changed radically, with IWM taking the lead in a dramatic display of relative strength which continued into last week. This has brought the latter into what could be a resistance area, as some top channel lines converge. We’ll have to see if that stops its bullish advance, and for how long.  

SPX daily chart

Last week had the markings of a potential correction; but, instead, the index surged to close near its high, with DJIA reaching 30,000 for the first time. The altered course of the market can easily be attributed to the announcement of a new vaccine, which is purported to be as effective as the previous two, yet it can be stored much more easily and will cost very little.

This has brought SPX to a technical point which will be discussed in more detail in the hourly chart section. While the trend remains bullish and the index looks close to making new all-time highs, the drawback is the behavior of the indicators which, so far, are not confirming. If these do not do so by early next week, we could be looking at the pull-back, which was expected a week ago and was simply delayed.  

All three oscillators were still bullish at the end of the week, but they are not keeping up with the price index. This can always be a warning that a momentum shift is taking place and, if not rectified immediately, will lead to a correction.  

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Disclosure: The charts provided are courtesy of QCharts.

The above comments and those made in the daily updates and the Market Summary about the financial markets are based purely on what I ...

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