SPX: Long-term trend – Bull Market?
Intermediate trend – SPX is in the midst of an intermediate correction (at least).
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.
CORRECTION STILL IN FORCE
Market Overview
“… if (when) the 1911 and 1903 levels give way, we could expect to test the former low of 1867 once again… (T)hat may produce only a temporary pause in the entire downtrend from 2135. There are lower projections, some of them potentially much lower. How the index handles the 1911/1903 and the 1867 support could give us some clues concerning whether or not we have started a bear market.”
1867 is a major support level because it is the bottom of the channel which defines the primary trend of the SPX at this time. This will be discussed in the analysis section. There was a 50/50 chance that it would hold once again, and it did! That does not mean that the correction is over! Far from it. The degree of distribution which occurred after the October 2014 rally, has given us much lower counts which will take time to fill. Unless some radical changes take place in the market trend, this practically ensures that we have started a bear market or, at least, a lengthy intermediate correction. Whenever the channel line which is drawn from the October '04 low is broken, the primary trend will accelerate into a steeper formation.
By rallying from the level of the August low, the index has somewhat clarified its current structure. Last week's rally is evolving in a corrective wave and not an impulse, adding to the notion that 1867 should eventually be penetrated, perhaps soon. While some cycles have apparently made their lows, longer ones are still bottoming and should continue to pressure the market for some time to come.
Friday's rally may have reached its apex at 1950. This fills a P&F target taken from the small base created over the last few days.
Intermediate Indicators Survey
The weekly MACD declined slightly from – 32.77 to -33.12. The deceleration is better observed in the histogram which rose slightly last week.
The weekly cumulative A/D rose fractionally last week. NYSI is shown below.
The projection target of 1950 comes from the 3X P&F chart.
Chart Analysis
The Weekly SPX chart (courtesy of QCharts.com, as well as others below) is supplemented by the weekly McClellan Summation Index (courtesy of StockCharts.com) which is posted directly below it. This permits us to obtain a good perspective of the present intermediate technical position of the index. I have drawn some of the main channels which are currently in play.
