Market Overview

It certainly looks as if it could be over in a couple of days. If so, the “real” correction has not yet started and we may have to reach 2250 before a more important decline takes hold. The question will then be: “Is the bull market finally over?” But that's in the future. Let's get back to now.

These positives are offset by a couple of important negatives: one is that, according to Erick Hadik ([email protected]), the intermediate cycle pattern does not fit a resumption of the uptrend to a new high at this time. Instead, he expects a sharp decline into the end of the month. The other is that the daily MACD does not show divergence and does not look ready to support a reversal higher. So we'll have to see what the market has to say about its near-term direction.

There is also a fairly reliable short-term cycle which is scheduled to make its low on Tuesday/Wednesday.

Analysis (This chart and others below, are courtesy of QCharts.com.)

Daily chart

In the last letter, I pointed out that we were fast approaching an important support level at about 2120 which could arrest the decline, at least temporarily. It consisted of a .382 retracement from 1992, the junction of several trend lines, and the presence of recent short-term peaks made by the index. This proved to be correct as SPX tried to pierce through that support on Monday, Wednesday and Thursday of last week, but all attempts failed, and by Friday, it looked as if we were already starting a new uptrend.