Long & Short Term Analysis & Outlook 2017, 12/30

Monthly Charts are updated.

The S&P 500 finished the December trading month above the trendline from 2000 but the trendline drawn from the 2007 peak is still intact. The high for the month touched the 2007 trendline and also minor channel resistance before pulling back.

OEX monthly closed up against the major Wedge line coming in from 2001.

Despite the higher close, there is still a significant bearish divergence seen in RSI-25, similar to those divergences formed at the major 2000 & 2007 tops.

As the saying goes among traders, how the January trading month ends, so could the trading year end as well.

With this in mind, based on how Volatility (investor fear) VIX monthly closed in December (near the high, after testing major horizontal support intra-month) the new year could start out in a volatile way and with it, further stock market weakness could be the outcome.

Whether this will be a normal pullback before heading higher again or a more serious correction, only time can tell for sure. It’s crucial that major trendline support holds (monthly closing basis) to avoid a more serious correction, in some part of the year.

If it’s heading towards new highs once again after a pullback only, then another test of the major L3 DGL (Dynamic Gann Level) is possible, before likely seeing a more significant correction thereafter.

To me, Gold looks bullish in the first few months of 2017, as important Triangle support was reached intra-month December. The recovery, which resulted in a bullish reversal candlestick for the month, should give a positive start of the year in this market.

At a minimum, Triangle resistance should be tested sooner or later, even a break of this area is not ruled out, in what could be a wave c underway to the upside.

Light Crude ended the year above important Triangle resistance but just barely so. RSI-25 still has plenty of room before getting overbought. As long as the wave 1 is not overlapped, this could be the wave c part of a one degree higher wave 4 underway.

Stiff resistance is up in the 65-70 zone. If reached at some point in 2017, RSI-25 is likely overbought by then and a larger top formation is looked for.

The Real Estate market reversed at channel support and the Dec. close near it’s high portend even higher prices in the first few months of 2017. It’s probably going for another test of trendline or channel resistance. Any downside breakout from this channel in 2017, would signal more serious weakness coming thereafter. At this point, the long term bullish trend is intact.

The Bond market, using the TLT monthly as a proxy, got hammered in the second half of 2016, with the 30y US T-Bond Yield surging as a result. The major trendline support it has now reached must hold, to not open up for even more weakness in this market. The outlook for Bonds is positive in the first few months before likely resuming it’s dominant bearish path.

The US Dollar seems ripe for at least a pullback, after climbing along a minor trendline for several months. Important trendline support comes in around the 98-97 level. As long as this trendline holds, the long term bullish trend is viewed as intact.

The Apple stock is trading within a rising bearish wedge, so any downside breakout from it would signal weakness towards the 100 area, at a minimum. If that support area fails to hold, more serious weakness could be the outcome.

Short term, either a full wave e terminated at the December high. Or a wave iv of c of this e is underway from that high, as better seen on this S&P 500 hourly chart.

A more bullish alternate wave scenario: wave 1 of 3 ended at the Dec. high.

Mid term, OEX Weekly momentum is just leaving it’s overbought territory, so the selling pressure could continue. The first strong support is down in the 980 area, where a reaction up is looked for.

 

12/02

Monthly Charts updated, comments are included on some of the charts.

Short & Mid term, either a wave a of e or possibly even a full wave e (truncated) reached it’s termination point at the recent Nov. high. A sign of a fully completed wave e would be any weekly close below trendline support. But let’s first see the market behavior at Fib. levels, the first one is down around 2,163.

If this is only a wave b of e underway to the downside, typical targets would be the 50% or key 61.8% retracement level, before heading higher in wave c of e. Weakness below that zone would start to put pressure on the wave b scenario and increase the odds of a fully completed wave e from the Nov. low.

In individual stocks, FB Weekly broke out to the downside from  a long standing bullish channel.

 

Reply

10 − 1 =