Charts & Commentary 03/31

S&P 500 daily

With the March trading month behind us, a look at long term monthly charts shows  that the OEX monthly formed a reversal type of candlestick, with it’s high touching major resistance.

As mentioned in a previous long term update, OEX prices are getting closer to the Apex of the two converging trendlines, so either an upside or (more likely) downside breakout could be the outcome within this coming Fall, at the latest.

But with the market now likely influenced by the downside pressure phase from the (60-70% accurate) 360 TD cycle, which is projected to bottom out in June, this Spring/Summer  could in fact bring market weakness towards major trendline support, at a minimum.

The Dow 30 monthly penetrated major trendline resistance intra-month but failed to overcome it, made a retreat and closed right below this important resistance area. This is bearish market behavior. The same situation is observed in the Nasdaq Comp. and  NYSE Composite Index.

Monthly RSI-25 and NH-NL indicators are still flashing a bearish divergence warning. And the monthly NYSE Summation Index trend indicator actually turned bearish after this trading month.

Volatility – VIX monthly major support is still intact. BPI monthly Sentiment closed below major trendline support, which is also bearish for the stock market.

Bonds – TLT monthly seems to be in a consolidation phase, forming a bullish Pin bar for the March month. Any clear break above the 3 months highs, would signal higher bond prices ahead and with it, a lower 30y US T-Bond Yield.

Gold took a breather in March, forming an Inside month, as it traded within the range of the previous trading month. This reflects indecision among Gold investors. Any break above the Feb. high would signal a test of trendline resistance as the next event to look for. A break of the low, on the other hand, would signal a test of trendline support instead.

Light Crude went through some weakness in March, testing important wedge support at the low, before recovering. As this market is getting closer to the Apex of two converging lines, the directional breakout from this pattern should set the tone for LC in the months thereafter. Rising wedges are usually bearish though, once completed.

Real Estate – REIT Index is still trading within a bullish channel, keeping the long term positive trend intact, after the March trading month.

A bearish Rising Wedge is developing in the US Dollar as well, with one more push higher likely, to complete a five wave structure from the 2016 low. Looking for a bearish breakout from this pattern thereafter.

Mid & Short term, despite the up close in the OEX weekly, the (not yet oversold) bearish momentum trend is still firmly intact, indicating this could be a temporary recovery only, before possibly heading lower again.

This is also suggested by the Neural Nets too, still holding on to it’s Short recommendation, generated 5 weeks ago.

Short term, the S&P 500 is currently in a vulnerable position, with it’s second lower high position, which from an Elliott Wave point of view can be a wave ii of a one degree higher wave 3 development from the March high.

So the market needs to break above the March high, to increase the odds of a wave 5 underway instead, which should lift the market into new high territory, sooner or later.

Friday’s bearish Hammer candlestick up against trendline resistance and on a higher Volume reading, could mean some distribution going on and with it, potential stock market weakness early next week. This is also indicated by the current RSI-2 position.

A finer degree wave count and a zoomed in version of support levels can be seen on this updated S&P 500 hourly chart.

The S&P 100 BPI (Bullish Percent Index) daily Sentiment chart shows trendline support is broken.

The Neural Net System is Short on the OEX weekly

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03/24

As better seen on the S&P 500 hourly chart, either a wave i of 3 or a full a-b-c corrective wave 4 from the March high, ended at first Fib. support and also on a daily trendline coming in from Dec. 2016.

This ending phase took the form of a Double Bottom pattern, with an oversold daily RSI-2  at the same time showing a bullish divergence. Also, S&P 100 daily momentum is preparing to go higher, from an oversold condition.

So the market is probably heading higher early next week, either as a brief corrective wave ii of 3 or as a last wave 5 higher, to complete the one degree higher wave e from Nov. 2016. The wave 5 scenario should take prices into new high territory.

Mid term, the trend looks bearish, as the S&P 100 weekly momentum has plenty of room to the downside before getting oversold. First Fib.  support is down around the 1010 level for the OEX and channel support is under the 1000 level, depending on when it’s reached.

03/17

Friday’s trading session turned out to be an Inside Day, trading within the range of the previous day. This reflects indecision among traders.

On the S&P 500 hourly chart a wave 2 or b probably ended right above the key Fib. resistance area mentioned in the previous update. Any break below Thursday’s pivot low, would signal weakness at least towards the first Fib. support zone, down around the 2346-2340 level.

If this is an a-b-c corrective wave 4 phase going on in the market, then often wave c is  equal to wave a in terms of price length. Any deeper correction than that, would instead start to smell of a wave 3 underway.

OEX Weekly is still trading within the range made a few weeks ago, with momentum heading lower from an overbought condition. Mid term Fib. support is down around the 1010 level for the S&P 100.

 

03/10

A few technical observations after this trading week:

As this hourly chart shows, the S&P 500 found support at the wave 4 bottom and the daily trendline, which is slightly above the first Fib. support on the hourly chart. Friday’s recovery could be a corrective wave 2 phase, as part of a new impulse struture to the downside.

The alternate view is that this could be the early stages of the last wave 5 of c, in case the one degree higher wave e still has some unfinished business to the upside. Near term, key Fib. resistancce is up around 2384.

Any advance beyond that level, would increase the odds of a wave 5 underway. The evidence would be a break above the recent March high. And if it comes with a bearish divergence in daily momentum, it would be additional support to a wave 5 scenario.

OEX weekly momentum turned bearish from a quite overbought condition. The high for the week was caused by channel resistance. Also, the week’s trading range came within the previous week’s range, a so called Inside Week, which reflects indecision among investors.

The directional breakout from this indecision, signaled by a break of the previous week’s high (1063.33) or low (1044.05), could set the S&P 100 tone for the weeks thereafter.

A bearish divergent Nyse Summation Weekly trend indicator turned bearish this week, after a bullish mode since Nov. 2016.

 

 

03/03

Monthly Charts are updated.

With the February trading month ended, Nasdaq monthly reached the major trendline which is drawn through the 2007 & 2014 tops. Despite this, RSI-25 is still flashing a bearish divergence warning. So a major tech market top forming up against this important resistance is looked for this Spring

The S&P 500 is also pushing higher and could go for another test of the major L3 DGL (Dynamic Gann Level) from 1994, before rolling over, long term. The same chart shows a bearish divergence in monthly momentum, in it’s overbought zone.

This bearish outlook is supported by increasing investor fear, as  VIX monthly closed near the high for the month, after finding intra-month support on a convergence of a major horizontal line from 2005 and a major trendline which started heading lower about a decade ago.

This is the same horizontal line which started the 2007 & 2014 debacles in the markets and now possibly in 2017 as well.

The VIX close near the high is increasing the odds of even higher Volatility in March, at least intra-month.

Spot Gold is continuing on it’s path high higher. The major trendline coming down from 2011 should act as a magnet on prices and i would be surprised if it’s not tested sooner or later. For March, this important resistance is up around 1325, 71 points higher.

The Gold Miners, GDXJ weekly hit the 43 resistance target a month ago, before once again making a retreat. This week it sold off sharply, on heavy Volume. It’s probably going for a test of trendline support, down around the 30 level. The key Fib. zone is right below it.

Light Crude made an ‘Inside Month’, trading within the range of the previous month, reflecting investor indecision. The directional breakout from this indecision could set the market tone in the months thereafter.

As suspected, the Real Estate market, using the REIT Index as a proxy, is well underway for a test of either trendline or channel resistance this Spring.

The Bond market, TLT monthly is recovering a bit, after it reached major trendline support 3 months ago. The question is how long this will last. A peek into the weekly chart reveals it’s most likely in a temporary wave 4 upside correction, before likely heading lower again, in wave 5. The key Fib. support area could be the target, which could lead to a long term oversold condition in RSI-25.

Yield  is taking a breather after the strong advance from mid 2016. It’s pulling back from minor trendline support, any break below the January low, could mean even lower rates coming.

The US Dollar is trading within a Rising Wedge looking pattern, which is bearish once completed. More evidence of this pattern would show up with any downside breakout from this pattern, on a monthly closing basis. This could open up for more serious weakness in the Buck. But until then, the bullish trend from 2014 is viewed as intact.

The Apple stock is probably in a blow-off phase, a view backed up by the anemic Volume readings and now a Double Bearish Divergence pattern observed in RSI-25, which portend serious trouble for this stock, once the Rising Wedge pattern is completed.

Short term, in the S&P 500 hourly chart either a full wave 5 or 3 of 5 of a one degree higher wave c of e, terminated at this week’s high. The odds of a short term top in place would increase with any break below the lower channel line. If so, a minimum downside target could be first Fib. support at 2345.

Mid term, OEX Weekly momentum has reached an overbought extreme, with price at the same time reached channel resistance. This is likely the wave e underway from the Oct. 2016 low, which could terminate at some point in March, if not already so.

 

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