Market Turning Points | Andre Gratian | 2011-09-18


After making a new high at 1370, the SPX lost its upward momentum and subsequently broke the important 1260 support level. This caused many market analysts to assume that the stock market had started a new bear market decline. I had pointed out previously that, in order to confirm a bear market trend, the index would have to trade below its July 2010 low of 1011. It does not look as if this is going to happen anytime soon. Now, my question is becoming: can the SPX even trade below its August 2011 low of 1101 by the time that the 3-yr cycle makes its low in early October?

A little over two weeks ago, a decline started from 1230 which looked as if it would continue until October and make a new low in the process. With the positive action of the past week, this scenario has come under serious scrutiny. Although a decline should eventually materialize into (about) the second week in October, It is no longer clear that the bottoming cycle will create enough weakness to challenge the 1101 level. In fact, the market is showing enough technical strength to suggest that, after a near-term correction, it might even make a new high before succumbing to the 3-yr cycle downward pressure. I will show you why when we analyze the SPX daily chart.

By Friday’s close, the hourly momentum indicators were overbought and the A/D was showing negative divergence in both indices. However, neither index had given a short-term sell signal. The Point & Figure chart looked as if it might be making a distribution top, but this will only be confirmed if prices drop below 1205. If we have a good opening on Monday, SPX could even run up to 1222 – 1228 before beginning a short-term correction.

With these parameters established, let’s start to look at some charts.



One Response to “Market Turning Points | Andre Gratian | 2011-09-18”

  1. excellent post, very informative. I wonder why the other specialists of this sector do not notice this. You must continue your writing. I’m confident, you have a great readers’ base already!

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