Retest Of The High?

Current Position of the Market - Retest of the High?

  • SPX Long-term trend: There is some evidence that we are still in the bull market that started in 2009, which could continue until major cycles take over and it ends. The 4550 projection which had been in effect since the March 2020 low has now been reached, but there is still no sign of a major top.
  • SPX Intermediate trend: A retest of the high is underway.
  • Cycles: Looking ahead.
  • Seven-year cycle – Last lows: 2009-2016. Next low: ~2023.

Market Analysis: SPX Weekly Chart

It may be a little early to take a look at the weekly chart. But then, perhaps it’s not. You know what they say about the early bird. There are a few things worth noting. First, last week was the deepest pullback by SPX in a year. And second, it created the deepest contraction in the CCI for the same time period, after that indicator exhibited some negative divergence.

The onus is now on that index to show that it was only a fluke, and that it can now go on its merry way making new all-time highs ad nauseam. Of course, we know that this is not the way the market works, so it behooves us to be attentive to a change of trend, especially since we are on the lookout for any sign that the seven-year cycle, due to make its low in 2023, is beginning to exert pressure on prices.

The bottoming of the seven-year cycle could bring about a correction on the order of the one which occurred early last year. And, more immediately, with a 20-week cycle low due in November (according to a Hurst cycle analyst), we should look for signs that this cycle is about to create an even deeper near-term correction. 

SPX Daily Chart

Below, I show in more detail that SPX recently displayed more weakness than at any other time on this chart. By drawing a channel around the price fluctuations since last May, we can see that the lower channel line was deeply penetrated, clearly demonstrating that the recent weakness was the greatest price weakness since May and beyond. So far, although we halted the decline and a good rally followed, there is still a long way to go to regain the price loss which occurred.

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Charts are courtesy of StockCharts.

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 ...

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