Turning Points
By Andre Gratian
A 3-dimensional approach to technical analysis
Cycles - Breadth - Price projections
“By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again -- and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint." -- Mark Twain
Current position of the market Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2012-2014. This would imply that much lower prices lie ahead.
SPX: Intermediate trend - The index started a counter-trend rally which has the potential of extending itself in a bumpy ride if it can overcome the resistance which lies directly overhead.
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 charts which discusses the course of longer market trends. Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know at ajg@cybertrails.com
Overview:
Overview:
We'll start by re-assessing the EW count. The low of March 6 was either intermediate (3) or (5). It is possible that there is one more alternate count whereby 11/21/07 started a corrective A-B-C wave (4) pattern and that we are now in C. We don't have to decide which it is because it will soon clarify itself, and we have several ways to determine short-term tops and bottoms until we get to the completion of (4), or whatever! Cycles suggest that this corrective uptrend could continue until July.
Both the daily and hourly indicators (which we will see a little later) suggest that we have arrived at a short-term top. I keep re-adjusting my parallel lines to the main channel until I have them exactly right. These define the trend channel and the inner parallels provide support and/or resistance to the SPX. I think that I now have the final version in place, so please disregard all previous prototypes. The solid red line on the weekly chart, which is also the dashed red line on the daily chart, should provide the most resistance.
We have negative divergence in the two lower indicators and it is more pronounced in the A/D (lower) oscillator.
There is also a minor cycle due to bottom on Monday, and a small cycle on Tuesday or Wednesday. This should cause a retracement to at least 806, with a probable move to 786, and possibly 770-775, depending on the weakness that sets in. Window dressing is still a factor. We'll evaluate this in the days ahead.
The hourly chart (below) also shows negative divergence everywhere, a sure indication of a short-term top. Two channels are drawn on the chart. The SPX is having more and more trouble reaching the top of both channels, and is already drifting outside the dotted line channel. It is about to reach the dashed line, which represents a support line. When it trades below that line. It will quickly reach the solid blue line which is the bottom trend line of the channel (about 790) where it could find temporary support.
I have labeled what I think is the most likely short-term count, with 5 waves complete, and the beginning of an a-b-c corrective pattern which will end at the low of the short-term cycle. We can always change it later if it needs correcting.
After a short decline into the bottom of the cycle, we should have a rally to a new high until we arrive at and create the next short-term top, for which we will get a target after the correction is over. This should complete the rally phase from 667 and be followed by a much more substantial decline into a cluster of more important cycles making their lows in early May.
Summary:
Directly ahead, we should have a correction of 2 or 3 days to a minimum of 806, and maximum 770-775. This should be followed to a new high with a target to be given after the correction.
And then, a much more severe decline into early May. Projection to be given after we've made our second top. We'll re-examine where we are after that.
Andre
The above comments about the financial markets are based purely on what I consider to be sound technical analysis principles. They represent my own opinion and are not meant to be construed as trading or investment advice, but are offered as an analytical point of view which might be of interest to those who
follow stock market cycles and technical analysis.
Both the daily and hourly indicators (which we will see a little later) suggest that we have arrived at a short-term top. I keep re-adjusting my parallel lines to the main channel until I have them exactly right. These define the trend channel and the inner parallels provide support and/or resistance to the SPX. I think that I now have the final version in place, so please disregard all previous prototypes. The solid red line on the weekly chart, which is also the dashed red line on the daily chart, should provide the most resistance.
We have negative divergence in the two lower indicators and it is more pronounced in the A/D (lower) oscillator.
There is also a minor cycle due to bottom on Monday, and a small cycle on Tuesday or Wednesday. This should cause a retracement to at least 806, with a probable move to 786, and possibly 770-775, depending on the weakness that sets in. Window dressing is still a factor. We'll evaluate this in the days ahead.
The hourly chart (below) also shows negative divergence everywhere, a sure indication of a short-term top. Two channels are drawn on the chart. The SPX is having more and more trouble reaching the top of both channels, and is already drifting outside the dotted line channel. It is about to reach the dashed line, which represents a support line. When it trades below that line. It will quickly reach the solid blue line which is the bottom trend line of the channel (about 790) where it could find temporary support.
I have labeled what I think is the most likely short-term count, with 5 waves complete, and the beginning of an a-b-c corrective pattern which will end at the low of the short-term cycle. We can always change it later if it needs correcting.
After a short decline into the bottom of the cycle, we should have a rally to a new high until we arrive at and create the next short-term top, for which we will get a target after the correction is over. This should complete the rally phase from 667 and be followed by a much more substantial decline into a cluster of more important cycles making their lows in early May.
Summary:
Directly ahead, we should have a correction of 2 or 3 days to a minimum of 806, and maximum 770-775. This should be followed to a new high with a target to be given after the correction.
And then, a much more severe decline into early May. Projection to be given after we've made our second top. We'll re-examine where we are after that.
Andre
The above comments about the financial markets are based purely on what I consider to be sound technical analysis principles. They represent my own opinion and are not meant to be construed as trading or investment advice, but are offered as an analytical point of view which might be of interest to those who
follow stock market cycles and technical analysis.
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