S&P 500

[PCMNewsdesk]

[Bottom Line]: The first wave down in Cycle wave [c], which should be the most severe leg of the long-term bear market that began in 2000, regained downside momentum early today. The move to new lows in the major averages is an important step as it marks the decline from the high as a clear five-wave impulse, confirming our long-term forecast. Near term, a fourth wave has ended; so more new lows are likely over the next few sessions.

The sharp decline in the S&P suggests strongly that the rise to yesterday’s high at 1794 was, in fact, a fourth wave, which has now been followed by the initial stairsteps of wave (v). A decline to complete wave i (circle) should now carry through at least the balance of the week. As shown on the second chart, the S&P is close to a prior wave (iv) low at 1768; so it may find some support near current levels. But this should prove temporary as the 45-minute chart shows a wind up from the end of wave (iv) that suggests wave (v) is intent on producing a big finish. This will remain true as long as the S&P holds below 1786.60. It will take a move up through 1794 to invoke either of the alternate possibilities shown on the 45-minute chart. If 1794 falls further resistance stands at 1801-1810, which includes the prior fourth wave. If wave i (circle) completed on Monday, the S&P could move somewhat higher before it turns back down.

[PCMNewsdesk]

As they say, the market sometimes leaves its options open. After a big down day on Wednesday and a big up day yesterday, the S&P experienced pretty much equal measures of both today with a 20+ point decline followed by a 20+ rally. Consequently, the prospects for the index are similar to what they were on Wednesday. The move up through 1794 shifted the odds in favor of a countertrend, either wave ii (circle), or possibly (iv) of i (circle); both of which can already be counted as complete. Under both scenarios, however, it is possible, probably even likely, that the countertrends will carry higher in the early part of next week. I say likely because the market is still somewhat oversold. Yesterday’s percentage of bulls in the S&P, for instance, came in at 38% (courtesy of trade-future.com), which is down from 73% on January 22. A little more upside would alleviate this condition. As noted on Wednesday, the upside potential is a little higher if the rise is ii (circle), as it is one higher degree. If this is the case, we will find out defintively when stocks turn lower as it will be followed by a very robust decline. In either case, the countertrend should stay below 1835. Breadth will be a key. If at any time the share of declining shares exceeds advancing stocks by more than 6.4:1, the extreme of the first leg down on January 24, it will signal definitively that we are in the higher degree wave v (circle) decline, which should carry much further, possibly to the October 9 low near 1590. The alternate wave (v) would be much narrower and shallower. The picture should clarify once stocks reverse. A clean break of 1767.99 will be signal that stocks are ready to move lower.

[PCMNewsdesk]

Assuming that the negative a/d's remain weaker in the current wave down than they were on January 24, the most probable wave labels of the selloff are shown in this hourly S&P chart. Wave i (circle) should be in its latter stages. There may be one more up-down sequence to a lower level to complete the final sub-wave, but the wave labels indicate that wave ii (circle) up is approaching. If wave (v) of i (circle) is not complete, the S&P's next target is 1705-1709. When wave ii (circle) up starts, it should amount to the largest upward retracement since the December 31 (Dow)-January 15 (S&P) highs. The Dow's prior wave (iv) high is 15,945.80 and the S&P's is 1798.77. These would be the initial targets.

[PCMNewsdesk]

[Bottom Line]: The rebound from yesterday's low is correcting the slide from April 4. The rally should end in the coming days and lead to another wave down to new lows. We still expect the selling intensity to grow once the next wave lower begins.

Wave i (circle) down ended at 1837.49 yesterday (Apr. 8), which was at a support shelf that dates back to at least early March (see green dashed line on daily chart). This should be the first wave of a larger five-wave decline that draws the market lower over the coming months. A popular perception appears to be that a "correction" cannot start until May, since April has a history of significant positive returns. That statement is true: historically, April has positive stock returns. But markets are the embodiment of paradox, often taking a path that does not seem possible to the consensus. The Dow and NASDAQ Composite are down for the year so far, the opposite of the consensus view at the end of last year. We'll see how the markets treat April 2014 over the next three weeks.

The market's near term rebound carried the S&P 500 to 1872.43 this afternoon. The index filled the open gap at 1865.09 (Apr. 4), which we cited Monday as a target in a bounce. Today's high carried slightly past a previous fourth-wave high of lesser degree (1870.57). The Value Line chart shows a similar retracement to slightly past a previous fourth wave. Wave ii (circle) could stop at today's S&P high or it may carry to a moderately higher range at 1875-1885. The S&P made daily intraday highs at 1883 on March 7 and March 21, so the top end of this range should be the maximum upward retracement. The Dow's range is 16,450-16,460 or 16,523-16,535. As we noted Monday, the key levels for the short term bearish case remain Friday's intraday highs at 16,631.60 in the Dow and 1897.28 in the S&P.

The 15-minute NYSE Tick reading diverged on the final push up this afternoon and it appears that a five-wave rally from late-morning is nearing an end. We're not sure of tomorrow's open but the Ticks and the sub-waves suggest at least a near term decline is approaching. It's possible that a decline would be the start of wave iii (circle) but we'll have to assess the odds when we see the quality of the selloff (i.e., waves and downside selling strength).

[PCMNewsdesk]

A brief comment on today's market session: We anticipated that the next wave down would be accompanied by even stronger selling intensity and today's decline fits this view. The NYSE advance/decline ratio was negative by a 3.5-to-1 margin, which is the strongest downside breadth of the nascent selloff. NYSE down volume was 88.2% of total volume. The S&P's wave ii (circle) high occurred at 1872.53, the Dow's at 16,456.10 and the NASDAQ's countertrend rally ended at 4185.10. The S&P retraced a Fibonacci 60% of wave i (circle), topping just past a previous fourth wave extreme. Today's decline was coordinated, with the three main stock indexes confirming each other's selloff. By day's end, all the major stock indexes are now down for year. The market appears now to be in a third-wave decline.

There may be a near term snapback rally but we are not certain of the odds. If it occurs, resistance is 1846-1860 in the S&P and 16,269-16,350 in the Dow. The S&P's next downside target surrounds 1800, which is approximately 15,800 in the Dow.

The other market's we discuss remain on track with our commentary from Wednesday.

[PCMNewsdesk]

This morning's most popular financial daily newspaper ran a front page article with the headline shown above. Just as a bull market climbs a "Wall of Worry," a bear market descends a "Slope of Hope." The latter phrase was coined by Bob Prechter in the 1980s, which he used to describe the psychological backdrop attending a bear trend in stocks. It's the "hope" that the former bull will soon reassert itself that keeps investors committed to the stock market, even as share prices work lower. The current sentiment is a strong clue that the decline is not over. Hope does not occur at a low, panic does. In our estimation, indicators of investor panic have not intensified to the degree that would suggest that stocks are at or near a low.

The news story that accompanied the headline is also interesting in that it refers to "some investors" who think the "overall market isn't dangerously high." The next paragraph cites the evidence: "The NASDAQ is trading at 35 times total per-share earnings. That is higher than the long-term median of 32 but nowhere close to the index's dizzying multiple of 175 in 2000." (emphasis added) In other words, the NASDAQ hasn't pushed to a once-in-a-generation manic extreme—from which the index crashed 78%—therefore the market "isn't dangerously high." Certainly these "investors" could be right, but we think that perhaps valuation is not the only thing that's high.

News articles convey prevailing sentiment but they are anecdotal. The wave structure is paramount in our analysis and our conclusion is that the stock market is tracing out a series of first and second waves from the April 4 highs at 1897.28 in the S&P and 16,631.60 in the DJIA. In this case, today's stock rally is a second-wave bounce of lesser degree than the second-wave bounce from April 8 to April 10, which we label wave ii (circle). Prices rallied early, sold off in the middle of the session and then bounced strongly into the close. The entire upward push from Friday's 1814.36 low (16,015.30 in the Dow) is an "a-b-c" upward correction. It either ended at today's high or will do so with a modest new high tomorrow morning. Thereafter, wave (iii) of iii (circle) down should draw stocks significantly lower. So our stance remains bearish.

The S&P's 15 minute chart shows the wave labels since the 1897.28 high on April 4. If today's 1834.19 high marks the top of wave (ii), prices should start lower tomorrow morning from current levels. If today's high is wave a of (ii), then the index will "pop higher" at the open to complete wave c of (ii) and then reverse sharply lower. Resistance for the latter scenario is 1835-1848. The Dow sports the same near-term structure. If today's 16,184.70 high did not mark the top of (ii), then a push to 16,221-16,270 ought to be an area that coincides with the wave (ii) high. It might even be possible that the Dow jumps above today's high and the S&P fails to confirm. Regardless, the market's downtrend should reestablish itself over the coming trading hours.

A rally above the April 4 highs at 1897.28 in the S&P and 16,631.60 in the DJIA would require a reassessment of the near term bearish case.

[Samirofi]

Weekly Technical Report 12-16/2015



By examening the daily graph, we notice that SP500 failed to stabilize above Linear Regression Indicator 34 and 55, and the significant resistances 2072.00 and 2078.75 remained stable in front of the bullish rally of last week. Meanwhile, SP500 are still trading within the overall ascending channel.


We prefer to remain intraday neutral, whereas the contradiction between trading within the ascending channel and the negative signals showing on technical indicators requires breaching 2078.75 or break the psychological barrier 2000.00 to confirm bringing back the negative pressure.

[ashif]

S&P pulls back from record.


The S&P 500 pulled back from record highs on Tuesday, while the Dow industrials edged up for an eighth straight day of gains, as investors digested mixed earnings reports amid lowered expectations for global economic growth.


Netflix's disappointing quarterly results weighed on the S&P 500 and the Nasdaq, while Johnson & Johnson's strong earnings and forecast helped prop up the Dow.


The International Monetary Fund cut its global growth forecasts for the next two years, citing uncertainty over Britain's looming exit from the European Union.


Even with the economic concerns triggered by Britain's recent vote, the S&P 500 and Dow have hit record highs in the past week. But investors are closely watching U.S. corporate earnings for signs of whether the momentum for equities can be maintained.


"There’s enough uncertainty out there in a market that’s done pretty well as of late to cause people to take some money off the table today," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.