Market Turning Points – February 16 2020

Intermediate

Potential Short-term top

Point & Figure overview of SPX

Long term trendThe bull market which started in 2009 shows no sign of having run its course.  A long count taken on the long term P&F chart gives us a potential target as high as 4080. P&F does not predict time; only price. (no change)

Intermediate trendIf this develops into an intermediate uptrend, the next projection is 3630.  This projection will not change if a normal pull-back occurs.

Important cycles

I follow only a few cycles which I use in my analysis.  This is complemented by the analysis of Erik Hadik (www.insiidetrack.com).

The 20-wk cycle is due on about 2/26

Market Analysis (Charts courtesy of QCharts)

SPX-NYA-IWM weekly charts: 

I have added the NYSE Composite Index in order to provide a broader perspective to evaluate “the market”.  Since the NYA is the one which contains the most number of stocks, it probably best represents the current market condition.  As you can see, the three indices are not in unison.  It’s too early to draw conclusions, and perhaps it means nothing since IWM has been diverging from SPX forever, which did not prevent the latter from making new all-time highs.  We know that the strongest index is the NDX which influences both the SPX and the DJIA.  So, until we see weakness appear in that index, we should not have any major concern.

SPX-NYA-IWM weekly charts

SPX daily chart

With the assistance of super strong NDX, the 12-year low drove SPX to a new all-time high.  You will note that neither of the two indexes shown above (NYA and IWM) achieved a new high.  As mentioned above, that in itself may not be a reason for concern, but if you consider the fact that the oscillators at the bottom of the chart are already showing some negative divergence, it means that while technically, we do have a break-out, it is not a very strong break-out  such as the one produced by the NDX which exceeded its previous high by a considerable margin and, in comparison to which the SPX looks much less robust).  But the reason for the divergences may be due to the fact that, as I have noted on the chart, the 20-wk cycle low is fast approaching.

Currently, according to the P&F chart, we could expect a retracement of 40 or 50 points.  A failure to make a new high after that would suggest that something is not as it should be.

SPX daily chart

SPX hourly chart

The hourly chart of the SPX does not require much sophisticated analysis.  A quick glance shows that a strong start (due to the beginning of a new 2-yr cycle up-phase) carried the index from 3215 to 3348 in just three days before the first profit-taking pull-back set in.  This was followed by another rapid continuation of the bullish trend; but it fizzled quickly into a struggle to keep the trend alive!  The trend line has now been broken and little has been accomplished since, giving the index the appearance of topping and being ready to reverse its trend.  But first, we’ll have to find out if that little push higher on the close goes anywhere.

If a cycle-induced correction occurs, standard Fibonacci retracement targets could take us down to: 3320 (.382), or 3300 (.50), which generally agrees with the P&F projections.

SPX hourly chart

UUP (dollar ETF) 

The short-term moves in UUP appear to be ruled by a 3-mo cycle which looks ready to roll over.  It may not be something immediate since there is still no trace of a topping formation, although the oscillators do suggest that a top could be near.  If that rhythm persists, it could have some implication for the performance of the following  two items.

UUP chart

GDX (gold miners)

GDX has been in a sideways formation for the past two weeks.  This appears to denote a waiting game rather than weakness that should have resulted from breaking the green trend line.  The oscillators also imply a state of readiness to resume the interrupted uptrend.  If so, the P&F chart suggests a quick move ahead to 32.50, followed by an extension to 35.  A market correction added to a UUP retracement would be a positive for GDX.

GDX chart

PAAS (Pan American Silver Corp)

A retracement in the dollar, coupled with a short-term correction in SPX could also have bullish implications for PAAS which is making a very bullish-looking consolidation.  After a fast 8-point move from 15.50 to 24.00, PAAS quickly got a .382 retracement out of the way and has been forming a re-accumulation base, since.  A break-out would take it to 28-29 on its next move.   But it must remain above its blue 50-dma.

PAAS chart

BNO (U.S. Brent Oil fund)

With an oversupply of oil continuing to increase as a result of concerns about the Corona virus, there is no good reason for BNO to reverse its downtrend just yet.  On the other hand, when it makes a significant reversal, it may signal that these concerns are abating and that the worst is over. 

BNO chart

Summary SPX is making a short-term top which could forecast the beginning of a correction into the end of the month and the low of the 20-wk cycle.

Editor

It has been many years since I was introduced to technical analysis by a friend. I immediately realized its value and learned everything I could about it, starting with the Wykoff course and later ...continued

Comments on this analysis

Your email address will not be published. Required fields are marked *


Latest Related News

Global stock outlook improves (S&P 500 forecast)

Stock indices have posted strong gains to start this week, rallying to new recovery high as coronavirus new cases/ deaths have shown some signs of slowing down in some US States (NY State) and in some parts of Europe (Italy and Germany).This has rejected the “risk off” theme from the start of April last week, with global share averages rejecting the prior moves lower (see… Continued

Approaching Short-term Low – Market Turning Points

Point & Figure overview of SPX Long term trend:  Only intermediate targets reliable at this time. Intermediate trend:  Maximum 2170-2030 this phase into mid-year after relief rally. Important  cycles followed I follow only a few cycles that I consider reliable in my analysis.  This is complemented by the analysis of Erik Hadik (www.insiidetrack.com). The 80-d cycle is due on 4/8 then 6/8; 40-wk ~7/15; 4.5-yr… Continued

Stock averages recoveries fading (S&P 500 forecast)

Global share indices tried to advance further on Tuesday into the end of quarter (end of the Japanese fiscal year) but have been unable to resume the bullish themes seen through latter March, last week.The subsequent hesitant setback over the past 24 hours may have reflected recovery fatigue, but also potentially a conclusion to end of month/ quarter, rebalancing flows.We see the short-term threat for… Continued

Next Cycle Low ~4/7

The first countertrend rally took SPX to its 200-DMA  where it was repelled. IWM did not fare nearly as well and remains with considerable relative weakness to the SPX.  There may be some additional trading within the range established this week, with the next short-term low due ~4/8.  An intermediate low is not due until mid-year. SPX daily chart Last Monday SPX made a low… Continued

Stock indices build on bases with firm recoveries (S&P 500 focus)

Global share indices advanced further Thursday, as we had flagged in our report on Tuesday with the US Senate passing the $2 trillion economic relief bill, which moves to the House on Friday.Stock averages have pushed up through numerous resistance barriers, to build on bases and confirm short-term recovery themes.We still do NOT see the conclusion to the bigger bear market established in March, but… Continued

Forex Brokers in your location