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When I was a stock broker years ago, a friend introduced me to technical analysis of the market and it is not an exaggeration to say that I fell in love with this approach! Ever since then, it has become an increasingly important part of my life, and I frequently  spend 8 or more hours ... more


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Short-Term Reversal
The relative strength between the three indices remains unchanged this week, with the TRAN exhibiting relative strength to the SPX while the IWM shows the opposite. This is congruent with the market’s position, which remains in a long-term uptrend.
Near-Term Objective Reached
SPX has reacted to two minor cycles making their lows a week apart, and has most likely ended its initial correction phase. After a rebound, it should be ready for another, possibly more severe phase of the correction.
Approaching Initial Objective
SPX is close to finding a low for this phase of the correction and this could happen as early as next week. It is not clear at this time if this will be a resumption of the uptrend, or if a more short-term downtrend lies ahead.
Correction Under Way
Last week’s decline can be attributed to a number of things: overbought market which had no significant correction or even consolidation over the last six hundred points, a structural pattern completion, or entering the weakest period of the year.
Short-Term Trend Lines In Focus
We should be approaching an important high, with confirmation coming over the near term. SPX has held steadily above its 60m chart trend line ever since it started its uptrend from 3350. DJIA and QQQ have held above similar trend lines, as well.
Continued Topping Behavior
Signs that SPX is ready to correct are increasing. The first cycle to make its low could only take it down 45 points before it rebounded to a fractional new all-time high of 3399.96. The next cycle is ready to trigger the next correction.  
S&P Tran - Only Up From Here?
Over the short term, TRAN outpaced SPX during the previous week, correctly projecting higher prices ahead, but then settling down to a match last week. The market is now approaching a nest of cycle lows which should cause the market to correct.
Correction Approaching
During the bull market of 2009, TRAN took the lead, but soon fell in step with SPX until August 2018. After that date, it started to diverge, implying that a correction was coming. It is too soon to determine what this divergence signifies.
Uptrend Continues?
The SPX and TRAN indexes continue in an uptrend from the March low with the TRAN still lagging but showing some minor relative strength on Friday. This may mean that SPX could push higher next week.
Minor Correction Underway
With the degree of recovery that SPX has made from the March low, we should be approaching an important high, with confirmation coming over the near term.
Time For Caution?
Next week could be a reality check for the stock market which, since its March low, has been unconcerned with the economic uncertainties that lie ahead. Last week SPX pierced through its former rally high by a fraction.
SPX About To Challenge 8/08 High
SPX made a new 4-week high last week which seems to be the result of the 37-td cycle making its low last week.
Short-Term Peaking
The indexes made a recovery high a month ago and have been trading in a range ever since.With the 40-wk cycle low looming ahead, it is likely that this consolidation will soon end and the decline from June 7 will continue into the middle of July.
More Selling Ahead
SPX has started the next phase of its correction which should take it below its recent low of 2965 right away. A retracement to the 2850 level is expected but it is unclear if it will come at the end of the first week in July, or in the third week
Decline Resumes
The rally which started a week ago, lasted only two days before a three-day consolidation started. On Friday, there was a move back to the top of the range which made a fractional new high, but prices began to retrace immediately.
A Return To Sanity
Last week, SPX met the projection target of 3220-3250 and reversed with a dramatic decline of 248 points intra-week.This should be the start of a decline into mid-July which is scheduled to be the low of the 40-wk cycle, at least.
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