We have updated our privacy policy and terms & conditions. Find out more here.
7
 

Stock Market Cyclical Bull Faces Important Test

By  |  Stock Markets  |  Dec 30, 2012 05:32AM GMT  |   Add a Comment
www.investing.com/analysis/stock-market-cyclical-bull-faces-important-test-149070
Stock Market Cyclical Bull Faces Important Test
By   |  Dec 30, 2012 05:32AM GMT
 

The S&P 500 index closed sharply lower Friday, retreating further from previous long-term highs of the cyclical bull market from 2009 and returning to congestion support in the 1,400 area. Technical indicators on the daily chart continue to weaken and are now slightly bearish overall, tentatively favoring a continuation of the decline from last week.

SP500
SP500

Early last week, cycle analysis identified the potential formation of the latest beta high (BH). Since then, the beta phase decline has developed as expected and the current short-term cycle has reached a potentially important inflection point.

SP500 2
SP500 2

A quick rebound followed by an extended alpha phase rally of more than 10 sessions in duration that moves above the last beta high (BH) followed by a shallow alpha phase decline would reconfirm the current bullish translation and favor additional short-term strength.

SP500_CA_Bullish
SP500_CA_Bullish

Alternatively, an extended beta phase decline of more than 9 sessions in duration that moves well below the last beta low (BL) followed by a weak alpha phase rally would signal the likely transition to a bearish translation.

SP500 3
SP500 3

From an intermediate-term perspective, the rebound off of the last intermediate-term cycle low (ITCL) continues to track the topping scenario that we outlined in November. Although a cycle high signal was not generated this week, the sharp decline indicates that a half cycle high (HCH) may have formed last week. Additional weakness next week would confirm that the HCH is in place and signal the likely transition to a bearish intermediate-term translation.

SP500_Weekly
SP500_Weekly

Additionally, the annual cycle remains on the verge of generating a cycle high signal. A monthly close below 1,412 on Monday would generate a confirmed signal, indicating that the latest annual cycle high (ACH) likely formed in September. The early formation of the ACH after only four months would be a bearish sign that would favor the transition to a bearish translation.

SP500_Annual
SP500_Annual

As we note in every long-term forecast, the formation of a long-term top always occurs in conjunction with an annual cycle translation change from bullish to bearish. At a current duration of 46 months, the cyclical bull market from 2009 is overdue for termination, so we will continue to monitor the development of the latest annual cycle closely.

sp500_Monthly
sp500_Monthly

Charts do not always have an important story to tell, but it is important to listen to their message when they do. The stock market is on the verge, and is issuing meaningful signals across multiple time frames, so it will be important to monitor price behavior closely during the next several weeks.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add a Comment

 

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Banque De Lhabitat
 
 
 
Are you sure you want to delete this chart?
 
 
 
Are you sure you want to delete this chart?
 
 
 

Successfully Reported

Thank you. This comment has been flagged for a moderator.
_touchLoadingMsg