SPX: Very Long-term trend – The very-long-term cycles are down and, if they make their lows when expected (after this bull market is over) there will be another steep and prolonged decline into late 2014. It is probable, however, that the steep correction of 2007-2009 will have curtailed the full downward pressure potential of the 120-yr cycle.
SPX: Intermediate trend – SPX has made a triple top, which is a bearish pattern. It has now given a strong indication that an intermediate correction is underwayAnalysis of the short-term trendis 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.Market Overview
After several days of resisting the downtrend, the indices finally started to rally on October 26. The SPX tacked on 31 points from Wednesday’s 1403 low, but met with heavy selling on the next day after nearing its top declining channel line, and retraced .618 of its advance. The Dow and NDX suffered the same fate.
I had warned that the SPX would reach a resistance level at the opening and to expect at least a consolidation. However, what started as profit-taking became more intense as the day progressed and, by the close, the index had lost all of its previous day’s gain, and filling the gap which had been created on Thursday. In the process it came to rest on the support level created by the base which had formed prior to the rally. Now the question is whether this was only a severe but normal correction of the uptrend which started at 1403, or if the counter-trend rally is already over. With cycles expected to start making their lows as early as next week, the uptrend does not have time on its side.
There is also a matter of an unfilled P&Fcount to 1395 and Fib projection to 1386. While (near-term) the election may play a role in the background uncertainty and resulting volatility, we know that the odds favor a continued decline of intermediate proportion into January 2013.
Because of its influence on the market (especially the NDX), AAPL has to be considered a key — if not the most important — short-term indicator. On Friday it made a new correction low, losing almost 20 points, and was definitely partly responsible for the overall market weakness. There was relentless selling until, by the close it had reached what could be an important Fibonacci projection. That projection taken from the high of 705 has already proved its effectiveness by producing several temporary holds on the way down: at 626, 613, at 591 – all of them important Fib measurements………………………….
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