S&P 500 Indicators Flashing Caution

Current Position of the Market

SPX Long-term trend:  There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over and it comes to an end. 

SPX Intermediate trend:  SPX has completed the next phase of its intermediate uptrend and should correct (SPX).

Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.

SPX Indicators Flashing Caution

Cycles:  Looking ahead! 

90-yr cycle – Last lows: 1843-1933. Next low: ~2023 

40-yr cycle -- Last lows: 1942 -1982. Next low: ~2022 

7-yr cycle – Last lows: 2009-2016.  Next low: ~2023

Market Analysis (Charts, courtesy of QCharts) 

IWM vs SPX (weekly)

IWM continues to flash a warning by showing significant divergence from SPX.  Since it has an excellent track record of alerting us to a reversal in the latter, that warning should not be ignored (IWM).   

SPX daily chart

Last week, I posted the multiple warning signs that SPX was coming into at least a short-term top.  I have updated them after last week’s market action.

1 – To begin with, the P&F congestion formed at the 3950 level gave us a count of 4180-4200.  Last Friday, SPX reached 4191 and pulled back to 4118 during the week but made a fractional new high on Friday.  It could still go a little higher, perhaps 4110-4220.

2 – From 3723, SPX has created a (green) channel the top of which corresponds to the price achieved by the index last Friday. There is a larger (blue) channel drawn across the two lows of the intermediate uptrend with a parallel across the tops.   The top of the green channel has already provided resistance to the advance, but this week’s retracement has opened-up a little more room on the upside for a potential 5th wave.

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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 sound technical analysis principles. ...

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