A Correction Is Starting

Current Position of the Market - A Correction is Starting

  • SPX Long-term trend: There is some evidence that we are still in the bull market that started in 2009, a market trend which could continue into 2021 before major cycles take over and it ends. A move up to ~4500 is possible before the current bull market makes a final top and SPX corrects into its next major cycle low due in 2023.
  • SPX Intermediate trend: SPX fell short of its base projection and turned down from 4257.
  • Cycles: Looking ahead.
  • Seven-year cycle – Last lows: 2009-2016. Next low: ~2023.

Market Analysis - Weekly Indices: SPX – DJIA – NDX

Of the three major indexes, the DJIA, which was initially the strongest, has since become the weakest and has most visibly supplied a sell signal. The NDX, which started to decelerate before the others, has not yet reversed its trend, but it could do so as early as next week. SPX, being a hybrid of the other two, has also given a sell signal, but not as forcefully as the DJIA.  

We did not need IWM to tell us that a top was being struck. INDU and SPX gave plenty of advance warning, both in their price action and in their oscillators. We will do more fine-tuning when we analyze the SPX daily and hourly charts.  

SPX Daily Chart 

SPX has given a sell signal which is confirmed by both its indicators and its price action. The index came up just a little short of its long-term base projection to 4310, only rising to 4257 before stalling and reversing. That was the first failure at attaining forecasting perfection.

The second was that after the short-term cycle finally made its low (red asterisk), it failed to provide the expected short-term rally to retest the high before prices collapsed on Friday and continued to decline in the futures after the close.

The final price action did warn that the 4310 level would most likely not be reached since prices had difficulty making further headway during the entire week -- especially after the short-term cycle made its low. IWM did put us on alert that a top was near, and the oscillators followed suit with negative divergence, all resulting in a price collapse on Friday.

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Charts are courtesy of QCharts.

The above comments, as well as those made in the daily updates and the Market Summary about the financial markets, are based purely on what I consider to be ...

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