ARE WE THERE YET? Market Turning Points

February 12, 2012

Market Turning Points

By Andre Gratian

ARE WE THERE YET?

Precision timing for all time frames through a multi-dimensional approach to technical

analysis:  Cycles - Breadth - P&F and Fibonacci price projections

and occasional Elliott Wave analysis

“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

SPX: Very Long-term trend – The very-long-term cycles are down and, if they make their lows when expected, there will be another steep and prolonged decline into 2014.

SPX: Intermediate trend – Intermediate uptrend still intact, but short-term top imminent.

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. 

Market Overview 

Last week’s heading was “NEXT SHORT-TERM TOP IN SIGHT”.  By the end of the week, indices did appear to have run into some resistance.  The SPX, which had a high of 1354, pulled-back to an intra-day low of 1337, and closed at 1342 – not exactly a significant reversal, just yet.  The market will have a chance to expand on that next week, but it will have to show much more weakness before it can gain short-term top status.  

Two cycles are at play which will decide the near-term fate of the market.  A minor one has already put the brakes on upward creeping prices.  It may have bottomed on Friday, or has another day or two to go.  However, the short-term trend of the market is more likely to be decided by the cycles nesting in the first week in March which could turn out to be either a market high or a market low.  The next week will tell us what to expect, but we need to keep in mind that there is an unfilled projection to 1364.

Whether the high point of the rally comes a week or two weeks from now, there is no question that a short-term top is forming.  For the first time since the current rally started in late November, the daily chart indicators are showing real weakness, and the contrary indicators are on the verge of turning up.

The VIX broke out of an intermediate trend line and closed at a two-week high, which was sufficient to start the weekly MSO in a new uptrend after six months of consolidation.

The charts will do a better job of showing the shift that is taking place, so let’s start by looking at the SPX Weekly Chart.

Chart analysis

It has been a while since we’ve analyzed this chart and, during this time, the lower indicator (MSO) has reached its upper limit and has begun to move sideways.  This is a warning that the intermediate trend is overbought and that we should be on the lookout for a market top. 

This weekly newsletter regularly analyzes the SPX, the Dollar, Gold, oil, and other important indices, as well as breadth and sentiment indicators.  To read the current newsletter in its entirety, please go to:

www.marketurningpoints.com

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