Correction Approaching

SPX hourly chart 

The hourly chart oscillators, in contrast to the daily ones, are riddled with negative divergence which call for an imminent reversal, although it is not certain that we will make the final high immediately. There could be one more minor pull-back before the final high.

Also, the ideal date for the high comes around the end of next week, but this is not assured either. I thought that the high would come with a rally into the announcement that a compromise had been met for the next relief bill. I am not certain what kind of a market reaction can be expected from Trump’s Saturday afternoon executive action, since it falls far short of what a relief bill would have provided.

Technically, because of the hourly negative divergences, it would make sense to have a minor retracement followed by the final rally. The target was derived from the count provided by the P&F version of the last consolidation, above the heavy red line. But this is actually a confirmation of the same count appearing at a lower level, which gives it more credibility.

UUP (dollar ETF)  

UUP made a slightly lower low in conjunction with $USD (which did not exceed its 93 downside-target), and is making a little consolidation pattern. The lower low in UUP created positive divergence in the oscillators, followed by a preliminary buy signal. We can therefore deduce that UUP is starting to reverse its downtrend. If so, we should get a confirmation by next week.

GDX (gold miners)

GDX, which had given me a conservative count of about 40, has gone a little beyond 45 and is probably trying for 47, but it may finally be calling it quits for the moment. It has given a preliminary sell signal which will be fully confirmed if it continues to drop right away, and breaks its secondary trend-line and sends the CCI into the red.

Since UUP seems ready to give a buy signal, it would coincide with a short-term sell signal in GDX. A more consequential sell signal would trigger if the main trend line is broken. Since the topping formation is still in progress, there is no valid P&F downside projection.  

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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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