Analysis of markets requires examination of all four market dimensions; Price, Time, Sentiment, and Momentum. Most of the time
significant market turns will come with evidence from all four dimensions. Most of the time does not mean all of the time. In prior posts I've mentioned going into the late
September peak that the SPX was not near any significant Fibonacci resistance and the wave structure was bullish. These two significant factors from the Price dimension caused me to miss the late September early October top and to misjudge the depth of the decline.
In late October 2018 evidence of a potential turn is present in all four dimensions.
Price: The SPX has entered a value zone near the apex of an Elliott wave - Horizontal Triangle. Note the heavy price overlap near the apex - this represents significant chart support.
The SPX is also nearing .786 retrace of the February to September rally. This is SPX 2620.05 just below the apex.
While most US stock indices have so far held above their February lows, two indices have broken their February bottoms.
The SPX - Mid Cap stock index - MDY is marginally below its February lows. If this holds it could represent a Fib ratio support of 1/1 with the February - September rally.
The NYSE Composite - NYA has broken its February bottom and as of 10/26/18 just above major Fib support. A .382 retrace of the rally from early 2016 to the NYA top in 2018 is at
NYA - 11841.99 the low on 10/26/18 was 11847.79
Also one very interesting aspect comes from comparing the October SPX decline with the February SPX decline. In February the SPX fell 340 points in 10 trading days.
The October SPX decline has so far been 312 points in 17 trading days. If the October decline is the kick off of a larger bear market why is it weaker and taking longer to drop than
the February decline?
Momentum: The daily SPX has a double bullish RSI divergence, and a bullish MACD - Histogram divergence.
The NYSE - A/D Line also has bullish divergences.
Date NYSE low A/D Line
10/10 12620 -2354
10/24 11957 -1672
10/26 11847 -1363
The NYSE - new 52 week lows has bullish divergence.
Date NYSE low 52 week lows
10/11 12299 526
10/24 11957 484
10/26 11847 327
If a super crash is developing why are less stock declining as the NYSE goes lower?
Sentiment: The Put/Call ratio is now showing a double bullish divergence similar to the late March - early April period.
Time: October is seasonally a bearish month for US stocks. November has a very strong bullish seasonal pattern. The bears are running out of time.
If the SPX breaks below 2594.62 it will invalidate the wave count illustrated and open the door to more downside.
US stock indices are at significant support levels with weakening downside momentum, waning bearish sentiment and will be soon entering the most bullish time of the year.
The weight of evidence indicates the October decline is probably a correction in an on going bull market. If the SPX has not already bottomed on 10/26 it could bottom near 2620 on 10/29.
My target for a possible intermediate or major SPX top is 3050. Time forecast - January to February 2019.
Mark
significant market turns will come with evidence from all four dimensions. Most of the time does not mean all of the time. In prior posts I've mentioned going into the late
September peak that the SPX was not near any significant Fibonacci resistance and the wave structure was bullish. These two significant factors from the Price dimension caused me to miss the late September early October top and to misjudge the depth of the decline.
In late October 2018 evidence of a potential turn is present in all four dimensions.
Price: The SPX has entered a value zone near the apex of an Elliott wave - Horizontal Triangle. Note the heavy price overlap near the apex - this represents significant chart support.
The SPX is also nearing .786 retrace of the February to September rally. This is SPX 2620.05 just below the apex.
While most US stock indices have so far held above their February lows, two indices have broken their February bottoms.
The SPX - Mid Cap stock index - MDY is marginally below its February lows. If this holds it could represent a Fib ratio support of 1/1 with the February - September rally.
The NYSE Composite - NYA has broken its February bottom and as of 10/26/18 just above major Fib support. A .382 retrace of the rally from early 2016 to the NYA top in 2018 is at
NYA - 11841.99 the low on 10/26/18 was 11847.79
Also one very interesting aspect comes from comparing the October SPX decline with the February SPX decline. In February the SPX fell 340 points in 10 trading days.
The October SPX decline has so far been 312 points in 17 trading days. If the October decline is the kick off of a larger bear market why is it weaker and taking longer to drop than
the February decline?
Momentum: The daily SPX has a double bullish RSI divergence, and a bullish MACD - Histogram divergence.
The NYSE - A/D Line also has bullish divergences.
Date NYSE low A/D Line
10/10 12620 -2354
10/24 11957 -1672
10/26 11847 -1363
The NYSE - new 52 week lows has bullish divergence.
Date NYSE low 52 week lows
10/11 12299 526
10/24 11957 484
10/26 11847 327
If a super crash is developing why are less stock declining as the NYSE goes lower?
Sentiment: The Put/Call ratio is now showing a double bullish divergence similar to the late March - early April period.
Time: October is seasonally a bearish month for US stocks. November has a very strong bullish seasonal pattern. The bears are running out of time.
If the SPX breaks below 2594.62 it will invalidate the wave count illustrated and open the door to more downside.
US stock indices are at significant support levels with weakening downside momentum, waning bearish sentiment and will be soon entering the most bullish time of the year.
The weight of evidence indicates the October decline is probably a correction in an on going bull market. If the SPX has not already bottomed on 10/26 it could bottom near 2620 on 10/29.
My target for a possible intermediate or major SPX top is 3050. Time forecast - January to February 2019.
Mark