It Is Time For Investors To Be Cautious

Current Position of the Market - Sunday, March 7

  • SPX Long-term trend: There is some evidence that we are still in the bull market that started in 2009. This bull market trend 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.
  • Cycles: Looking ahead.
  • 90-year cycle – Last lows: 1843-1933. Next low: ~2023.
  • 40-year cycle -- Last lows: 1942 -1982. Next low: ~2022.
  • Seven-year cycle – Last lows: 2009-2016. Next low: ~2023.

Market Analysis - SPX Weekly Chart

Below, I have posted a weekly chart of SPX starting from the previous seven-year cycle low of early 2016. Other major cycles lows which lie directly ahead and can affect the market adversely are also mentioned. The source of information for this data is deemed to be reliable.  

The oscillators at the bottom of the chart suggest that the index is making an important topping formation. If you compare the current pattern of the CCI to the one it made in 2020, you will notice an uncanny similarity. This goes for the SRSI as well. The latter has already given a sell signal and the CCI, which normally lags, is getting ready to do the same.  

If the 2020 market action is a preview of what is about to take place in the near future, a steep price retracement lies directly ahead; except that because of the cycles involved, it could be just as sharp but more prolonged. It is a fact that a cycle which causes a market correction at the very end of its phase brings about a swift and sharp decline in prices. We are currently faced with the probability that not one, but three major cycles are positioned to enact this scenario.  

Since the market top could take another few weeks to complete, a P&F projection for the extent of the decline which lies ahead is not yet available. However, since we are probably ending a 12-year bull market, we can assess the downside risk with standard Fibonacci retracements of the entire span from the March 2009 low. These price levels are provided on the chart.  

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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 ...

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