Stock Market: CNBC Report
LET'S LOOK AT THE FTSE DAILY CHART
There are a few things that are notable on the chart. Most of the highs and lows while in the sideways pattern have been exhaustion moves. Significant lows that come from sideways patterns will show some slowdown in volatility and that hasn't occurred. The rally was 8 days and the subsequent selloff has been 7-days and with no imbalance in "time" it remains a sideways pattern. The last low was a break of an obvious low and therefore created a "false break" low. That pattern for low can be very powerful and if valid would indicate a test of the high of 8-days and in much less time than the 7 day move down -- if this were a true "false break" low. Considering Friday's exhaustion that may not be the circumstance. If this is a False Break low then an immediate test of the highs to the sideways pattern should occur. If it doesn't then it is not a false break low but simply a lower low. I still see the 22nd as a probable turning point in time but I can't qualify the significance until I see how the index goes into the date. Since the current low is still within the 1/3 to 3/8 retracement a resumption of the bull trend is still possible.
LET'S LOOK AT THE S&P 500 INDEX DAILY CHART
I have indicated we could be seeing a crash or panic cycle setting up according to the current "time cycles." The very basic timing pattern is a 90-day low to high completion followed by a 135 day lower high. Unfortunately the index has already had an exhaustion move down and another this close in time does not seem reasonable. The consensus has become extremely bearish and that usually keeps a panic from developing. But the 135-day expiration could still be an important turning point. Let me emphasize there has been too much damage already so a panic from this timing will not occur but a move down if the index goes up into the 22nd is still a good probability.
LAST WEEK I INDICATED THE METALS WERE IN A CAPITULATION DOWN AND WE LOOKED AT COPPER AS AN EXAMPLE
LET'S LOOK AT THE COPPER CHART
Copper came down to the 50% mark or our first objective we had for the move down. Gold had a huge capitulation day down for this current low but may have ended its bull campaign. Copper and some of the other industrial metals may have held enough to still keep their trends intact -- maybe. If the trend is still down in copper this rally should get no higher than marginally above that horizontal line and not rally more than 4 days and there are now two days or rally. The uptrend in Gold could be complete. While in blowoff trends markets show smaller and smaller corrections until the trend is complete. This looks like a complete trend in Gold to me at this time. Copper is close to that situation but not yet confirmed.
LAST WEEK WE STARTED WITH COPPER SO LETS TAKE ANOTHER LOOK
Last week I indicated the metals appeared to be in the process of capitulating down and we looked at copper. This is the last range of movement divided into 1/8th and 1/3rds. Copper and had a minimum objective of 290 and possibly 268 on this thrust down. You can see the index came down and hit the first objective. Any market that shows support at 50% will almost always run to the 3/8 division of that range, which it has done. Since this is a fast trend down, it must comply with fast trend criteria so if copper can move up past 4-days (first-degree counter trend) it would indicate the move down may be complete. If it can close above 323 it would indicate the move up has gone too far to consider the market trending down. If it turns down from here the fast trend is still intact.
GOLD WAS ALSO IN AN EXHAUSTION OR BLOWOFF TREND LET'S LOOK AT THE MONTHLY GOLD CHART
As we do with every market the range has been divided into 1/8th and 1/3rd and you can see the current support is within the 1/3rd to 3/8th price zone. When exhaustion or blowoff trends fail to hold ¼ of the advance it is the first indication the up trend may have completed. Holding the 1/3 to 3/8 price zone for a blowoff trend has a possibility of keeping the trend intact but the odds are not with the uptrend anymore. It is almost a neutral to bearish reading. If price ever hits the 50% mark at 504 the rally will never get through the ¼ mark at 627. Thursday showed a HUGE gap down and run and the market is now consolidating that large move with a small rally at this stage. Other than that huge capitulation down I don't have much to indicate this move down is complete. And I do believe the odds favor this bull trend now complete. This looks like the August 1976 to January 1980 bull campaign. That first correction moved down to 50% and rallied 50% to ¼ and resumed the bear campaign. When markets are in blowoff trends corrections tend to get smaller and smaller. This is what creates the arcing trends or the three or four ascending trendlines. When that pattern is broken by correcting more than 1/4 it is an indication the blowoff is complete.
LET'S LOOK AT THE NIKKI 225
The chart shows the entire bull campaign and as usual we have broken the range into 1/8th and 1/3rd. You can see the last support was within the 1/3 to 3/8 division and if this were just a correction in an ongoing bull campaign would be very close to the low. This price is also ½ of the last leg up. We had previously established the first week in July as a possible low to the drive down. If there is going to be another leg up this is the price level that needs to hold.
The daily chart showed an island reversal last week so there is an exhaustion of some sort at the low. The market needs to move up more than 4 days to indicate the down move has lost its momentum. It is now up 2 days.
This was an exhaustion style of leg up but the complete trend was not the same form as the metals. The pattern since the bear market low has been one year up followed by a one year consolidation and now another leg up. Gold has a much different "Pattern of Trend."
The past few weeks I've been remarking how the US Stock Indexes could be setting up for a crash of some sort starting this week. This probability is recognized through time cycles. But the move down since the high is too fast, sentiment has become far too negative to allow for that type of movement and we've already seen a couple capitulation style move down and it would be unusual to follow that with a crash or panic move down. The cycles are still there for a high but the "Pattern of Trend" is not there to justify a panic. But the time window still represents resistance in time and a possible vibration down starting the 22nd.