Today’s Market Comments:
Stocks fell hard this week from tops that finished in several patterns we have been tracking. The decline in the S&P 500 and Industrials was five waves down, which means the next declining trend of significance has started. The Rising Bearish Wedge in the Industrials from the April lows is finished and an initial downside price projection is the start of this pattern, around the 20,400 level.
On page 36 we show another pattern, a larger degree Rising Bearish Wedge that started in August 2015. While it is not clear whether the top in the stock market at this time is the top of the third of five major subwaves for this pattern, or is the concluding fifth wave, here is some guidance. If prices drop below the bottom boundary of this pattern, below 21,000, then we can be certain “the” top is in for this large degree pattern, which means a new major Bear market is starting now, with an initial downside price target of 15,500ish. The interesting thing is, the downside price target for the smaller Rising Wedge from April is below that level, increasing the odds that a major Bear market is starting now. But the price action over the coming weeks will be the final determinant. There is a large Jaws of Death pattern in the small cap Russell 2000, shown in charts on page 42, that also looks complete.
On Friday, August 11th, stocks rose, the rise in Blue Chips and small caps very minor on lower volume, the rise in techs moderate. Our short-term key trend-finder indicators remain on a Sell signal this weekend, as does our intermediate term Secondary Trend Indicator. There could be a small corrective bounce early this week before the downtrend continues. The decline this week was predicted by large Bearish divergences between the various stock indices we track and their 10-day average Advance/Decline Line Indicators, as shown in charts in previous week’s reports and again this weekend.
The concern at this time is there are historic dangerous patterns in the stock market that are warning of a major decline. There is the multi-decade Jaws of Death pattern shown in chart on page 34. There is the monthly MACD level shown in chart on page 33. We are on the clock of an 8 observation Hindenburg Omen potential stock market crash signal. There is the outlier Price Earnings Ratio that the S&P 500 is currently selling at. There was the recent record low in the Volatility Index. Technical analysis is the study of what the markets are telling us. It is the language of the markets. We are being given a warning that a major Bear market is either starting now, or will by early 2018 should the Rising Wedge from 2015 not yet be finished.
As for the U.S. Dollar, this weekend we see its Monthly, Weekly and Daily Full Stochastics are contemporaneously deep oversold (see charts on pages 44 and 45). The pattern shown in chart on page 45 is a Declining Bullish Wedge which is complete. The U.S. Dollar is starting a new rally trend that should be significant, rising toward the 103ish level from its current 93ish level. More upside potential exists.
On page 47 we show a large degree pattern for Oil, which tells us it is starting a strong wave E Bull market trend, that could take Oil substantially higher, of course with corrective declines along the way, but the upside for this rally is 150 or higher, which suggests war is coming over the next several years that wipes out excessive supplies. A Middle East war would do the trick for sure, and the pattern in Israel’s TA125 is warning a major decline is coming to that nation’s stock market, as shown in this weekend’s Global report.
On page 48 we see a large degree pattern for Gold that tells us the precious metal is inside a complex primary degree wave (2) decline, and shorter term, is inside the middle wave B-up of the second 3-3-5 Flat pattern for (2). Gold should be headed toward 1,400 over the coming weeks and months. Same scenario for Silver, with an upside price target of 22.50.
Our Blue Chip key trend-finder indicators moved to a Sell signal Thursday, August 10th, 2017 and remain there Friday, August 11th. The Purchasing Power Indicator component triggered a Sell signal Thursday, August 10th. The 14-day Stochastic Indicator generated a Sell on August 10th, and the 30 Day Stochastic Indicator generated a Sell on June 21st. When these three indicators are in agreement, it is a short-term (1 week to 3 months’ time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral key trend-finder indicator signal.
Our intermediate term Secondary Trend Indicator generated a Sell signal Thursday, August 10th, and remains there Friday, August 11th, flat Friday (out of a possible 9 points), at negative -12, needing to rise above the positive + 5 threshold for a new Buy.
Demand Power fell 5 to 361 Friday while Supply Pressure fell 6 to 388, telling us Friday’s rise in Blue Chips was weak. This DP/SP Indicator moved to an Enter Short Signal Thursday, August 10th, and remains there Friday, August 11th, 2017.
The Plunge Protection Team Indicator moved back to an “Off” signal on Thursday, December 15th, which means the PPT is likely to stand down from supporting the markets while this indicator remains on an “Off.” This does not mean stocks cannot rally, it just means there is not likely to be significant government intervention at this time. This indicator is designed to identify high probability periods where the PPT will be supporting, or buying the stock market (when it is on a Buy signal) and when it moves to a Neutral of Off signal (formerly called Sell), it does not mean the stock market will decline, it means the PPT’s interest in buying the market is off rather than on, and market forces outside the PPT are more likely to determine stock trends up or down. In other words, a Neutral or Off signal means the odds are higher that the PPT stands down or has little influence on price trends.
Caution: I would not bet the farm on a Crash. Crashes are rare and maybe the pattern will morph into something we presently do not see that is less ominous. Risk must be managed. Maybe the Fed buys the entire stock market, who knows given their track record. Maybe a black swan event is postponed several months.
Gold and Miners rose Friday, August 11th. They generated a Sideways signal Friday, August 4th, a s the HUI 30 Day Stochastic triggered a Sell signal August 4th, and our HUI Purchasing Power Indicator generated a Buy on July 17th. When these two indicators are in agreement, it is a directional signal, and when at odds with one another, it is a combination neutral signal. On Friday, August 10th, the HUI Demand Power / Supply Pressure Indicator triggered an Exit Short signal. On Friday, August 11th, Demand Power fell 1 to 402 while Supply Pressure rose 1 to 400, telling us Friday’s HUI rise was weak.
DJIA PPI Flat at + 44.08 on a Sell
DJIA 30 Day Stochastic Fast 56.67 Slow 64.67 On a Sell
DJIA 14 Day Stochastic Fast 36.67 Slow 60.56 On a Sell
DJIA % Above 30 Day Average 56.67
DJIA % Above 10 Day Average 23.33
DJIA % Above 5 Day Average 13.33
Secondary Trend Indicator flat at Negative – 12, On a Sell
Demand Power Fell 5 to 361, Supply Pressure Fell 6 to 388 Sell
McClellan Oscillator negative -207.85
McClellan Osc Summation Index + 2365.36
Plunge Protection Team Indicator + 15.71, on an Off
DJIA 10 Day Advance/Decline Indicator – 420.1 on a Sell
NYSE New Highs 17 New Lows 157
Today’s Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated a Sell signal Thursday, August 10th, 2017, and remain there August 11th, 2017. The NDX Purchasing Power Indicator generated a Sell on July 31st, the NDX 14 Day Stochastic triggered a Sell signal on July 27th, 2017 and the 30 Day Stochastic triggered a Sell signal on August 10th. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to an Enter Short positions signal Wednesday, August 9th and remains there August 11th. On Friday August 11th, Demand Power rose 4 to 404, while Supply Pressure fell 4 to 427, telling us Friday’s rise was moderate.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal August 9th, needing to rise above positive + 5.0 for a new Buy. It fell to – 11.0 on Friday, August 11th, 2017.
NDX PPI Rose 4 to 160.54 On a Sell
NDX 30 Day Stochastic Fast 32.00 Slow 40.40 On a Sell
NDX 14 Day Stochastic Fast 15.00 Slow 25.80 On a Sell
NDX 10 Day Advance/Decline Line Indicator -11.0 On a Sell
NDX Demand Power Rose 4 to 404, Supply Pressure Fell 4 to 427 Sell
RUT PPI Flat at 139.82 on a Sell
RUT 10 Day Advance/Decline Line Indicator -258.6 On a Sell
Today’s Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Sideways signal August 4th, 2017.
HUI PPI Flat at 188.36, on a Buy
HUI 30 Day Stochastic Fast 75.00, Slow 70.00 on a Sell
HUI Demand Power Fell 1 to 402; Supply Pressure Up 1 to 400, Exit Short