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Weekly Market Analysis - 23 (Members Only)

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Indices

Last November's General Outlook report predicted the S&P 500 would move up to the 2095/2116 area (see chart #1) to complete wave 3 and subsequently give way to wave 4. If chart # 2 is any indication, the forecast must then be unfolding before our eyes, with wave 4's sights set on the mid-October lows.  As of this writing, the index is still trading above The Head-and-Shoulders neckline. However, confirmation could come at any moment.



Chart #1. Wave 3 came to a completion and gave way to wave 4.



Chart #2.  (Futures continuous contract). A Head-and-Shoulders top. As of this writing, the index is still trading above the neckline.

Chart #3 of the Nasdaq 100 below depicts a 3 Falling Peaks formation that is awaiting confirmation. Similarly to the S&P 500, the prospective down move has the mid-October lows as its objective.



Chart #3. (Futures continuous contract). A '3 Falling Peaks' formation has its sights set on the mid-October lows.

Volatility

Chart #4 of the VXX sports two recognizable chart patterns. The classic one is a '3 Rising Valleys' whose upside objective appears to be in line with an open gap dating back to February 2014, while the harmonic one has the bearish BAT as its minimum objective, with the possibility of morphing into a bearish CRAB



Chart #4. The VXX sports two recognizable chart patterns: a classic '3 Rising Valleys' and a harmonic BAT or CRAB.

Philly Semiconductor Index (SOX)

Chart #5 below depicts the confirming weakness exhibited by the SOX. Similarly to the S&P 500 and Nasdaq 100, the mid-October lows are likely to be retested before this forward-looking indicator would resume its march higher towards new highs.



Chart #5. The weakness exhibited by the SOX is confirming the bearish view.

Treasury Bonds

Chart #6 below depicts the recent action in the TLT. An old trendline has finally been reached, and last week's price bar qualified as bar #12 or a possible TD Sequential Sell Countdown 13. We shall be on the lookout for a potential outright reversal in treasuries. However, to count on such a reversal solely based on DeMark exhaustion numbers would be ill-advised. 



Chart #7. The TLT closed near its highs last week, having finally come in contact with an old trendline. Price gapped above the Cup-and-Handle's

measured move on Friday (yellow arrow).

Dow Jones Transports (TRAN or DJTA)

The TRAN (or DJTA on some platforms) finally reached the upside objective of a long-term chart formation, as well as the top of the channel established by the Andrews' Pitchfork. It too is confirmation the weakness in the overall market. Two DeMark exhaustion signals, namely, TD Combo and TD Sequential 13's, were registered on the heels of the recent pullback. As far as the chart pattern in play, the daily chart (not shown) depicted a harmonic bullish BAT with a downside target in the 7880's. It's worth noting, however, that the BAT could very well degenerate into a CRAB. We'll jump off that bridge when we get to it.



Chart #8. Bearish Dow Theory confirmation is at hand, as depicted by the TRAN (or DJTA on some platforms).

NASDAQ Banking Index (BANK)

BANK's story is no different. Its lackluster chart should serve as yet another bearish confirmation gauge. This index has recently moved south of the red line to add insult to injury. As the saying goes, 'Trust BANK, do not fight BANK.'



Chart #9. BANK has recently moved south of the red line to bolster the bearish view. 

Trade smart,

Peter




If you found my analysis thorough and useful, consider subscribing to the TradeWinds service on 61point8.com for an ongoing analysis of the U.S. market indices and a steady flow of trade setups. As always, you will continue to enjoy my free contributions on Twitter and StockTwits by following @PeterGhostine. My StockTwits page is http://stocktwits.com/PeterGhostine.

 





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