Market Turnng Points Weekly analysis

April 17, 2011 Week-end report By Andre Gratian Precision timing for all time frames through a 3-dimensional approach to technical analysis: Cycles - Breadth - P&F and Fibonacci price projections “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 Very Long-term trend – The continuing strength in the indices is causing me to question whether we are in a secular bear market or two consecutive bull/bear cycles. In any case, the very-long-term cycles are down and, if they make their lows when expected, there will be another steep and prolonged decline into 2014-15. Long-term trend - In March 2009, the SPX began an upward move in the form of a bull market. Cycles and P&F projections point to a continuation of this trend for several more months. SPX: Intermediate trend – The intermediate trend is still up and may already have resumed. 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. Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know at ajg@cybertrails.com MARKET OVERVIEW The SPX 1250-1270 base gave us several potential P&F projections. The most conservative one of 1334 has already been filled and, as is the normal process, has been followed by a consolidation. This consolidation may be over or nearly over. The small distribution phase which formed at 1332 called for a retracement to about 1300, with a maximum of 1286. Last Wednesday, the index touched 1302.42, re-bounded sharply from that level, and continued to rise into Friday. There is a good possibility that the low of the correction from 1339 has now been seen. However, a number of technical factors are suggesting that a pull-back will be needed before we can move higher. We'll examine these in our analysis, but one of them is the fact that the QQQ may have suffered a minor set-back as a result of GOOG's weakness on Friday and may need a small period of recuperation. Should the weakness exceed more than a few points, it could alter the scenario. Sentiment is supportive of higher prices. The SentimenTrader has solid positive long-term readings, and the VIX does not show any inclination to start an uptrend. In fact, the VIX actually dropped while the SPX was correcting from 1339 to 1302. That was unusual behavior for this index which normally moves in the opposite direction from the equity indices. I had suggested that Gold and oil may have reached projection highs which could cause them to correct, while the dollar was approaching a projection low. Both gold and oil pulled back for a couple of days, and the dollar has not done much, up or down. Let's see what happens over the next couple of weeks. CHART ANALYSIS One of the reasons that I am cautious about calling for an end to the correction is that I don't have a confirmation that we have reversed. The indicators of the weekly chart have not crossed and its MACD is still down-trending. The indicators of the Daily Chart (below) have not given a buy signal either. Although the two lower ones have turned up with the price last week, all three indicators are still below their pink MA. Also, the price has not had enough upside momentum to close above its moving average. For these reasons -- and others that I will discuss when we analyze the hourly chart, it is best to see what happens next week before forecasting the resumption of the uptrend. This weekly newsletter regularly analyzes the SPX, the Dollar, Gold and oil, as well as breadth and sentiment indicators. To read the current newsletter in its entirety, please go to: www.marketurningpoints.com Click on “Newsletters” Andre