2017 preview

Armstrong is up until the end of 2017 (24th of November)

Dave 1968 is up until mid 2018

Ferrera

Sunspots are now hard down until 2020

Lunar node/Gann financial timetable is still up until the 14th of June 2018, however there is a potential minor low on the 19th of November 2017.

Major aspects are:

1. The current Saturn-Uranus trine will have two more hits in May and November 2017 (expect highs)
2. The current Jupiter-Uranus opposition will hit again in early March and late September 2017 (expect lows)
3. Jupiter-Saturn sextile in early September 2017.
4. Jupiter-Saturn semi-square in December 2017, March 2018 and September 2018

Mercury inferior conjunctions (which are often lows) will be: 

1. 28/12/2016
2. 20/4/2017, 
3. 26/8/2017
4. 13/12/2017

Summing up the above.....

The bullish case is:

• Saturn-Uranus trine until November 2017
• Jupiter-Saturn sextile until September 2017
• Lunar node cycle until late 2017 (detrended GDP) or mid 2018 (natal aspect)
• Ferrera up until 2017 or 2018.
• Dave1968 until mid 2018
• Armstrong until late 2017

The bearish case is:

• Sunspot cycle is now hard down until 2020
• Jupiter-Uranus opposition in March and September 2017
• Jupiter-Saturn semi-square from late 2017 onwards

Conclusion....

The bull market since 2009 has been epic in it's relentlessness (at least for the US markets) but it doesn't appear likely to collapse just yet. The cycles listed above are the heavyweights and the balance is still biased to the bullish side so it would be wrong to expect major fireworks until late 2017 at the earliest. From then on however things will start to change rather quickly!

In the shorter term there will be bearish forces peaking around March/April and September next year, so January/February is probably a good time to get positioned for downside but it would be best not to get too excited just yet.

Best of luck for 2017!

chat

A couple of comments on the preceding charts...

The SPX is up above the 65 day Keltner Channel with waning momentum.

BPNYA is also waning, but not severely and it is up at a relatively high level.

The relative strength of RUT and COMPQ is a bit grey... both ratios have signs of relative weakness but again the weakness is fairly tame and there is also some signs of relative strength.

The NYMO has some genuine divergence on the board, but this is the weakest of indicators for short terrm divergence.

NYSI is trending up in the short term but still carries the setup for a longer term divergence.

VIX is hugging the bottom Bollinger Band and the support of previous lows.

CPCE has turned up from a top worthy level.

NAAIM is again over 100 and at a high level.

RYDEX asset allocations appear to be going to an extreme!


Conclusion:

Prices and sentiment have reached overbought levels and divergences have started to build.

In my view the conditions are in place for a top. It has either recently been put in place or will occur in the relatively near future.

The first Saturn-Uranus trine was exact yesterday and appears to have overpowered the Jupiter Uranus opposition (as previously anticipated).

The XSO has been showing some considerable weakness relative to the XJO so an even stronger bearish argument is in place for the XJO.

Merry Christmas!  : D

charts

NYSE

The US indicies have a rocket under them but there isn't too much to get excited about at the moment...

A couple of points about the SPX:

1. It has shot clearly above the upper Keltner Channel (custom settings) which is usually a very good place to sell.

2. The situation with the Summation Index is similar to the ASX in that almost a rally to new highs is almost certain to print a -ve divergence.

3. The prints on the McClellan Oscillator have been above zero (which is a change!) but they're not really indicating a breadth thrust to kick off a new extended rally.

Other breadth measures are mixed:

1. Bullish Percent has a solid uptrend but is a shade weak at the moment.

2. New highs hit their highest level in a long time this week! Perhaps a sign of a short term exhaustion.

3. The Russell 2000 is showing continued relative strength; but

4. The Nasdaq has weakened over the past six weeks or so.

In summary...

The SPX seems almost certain to retrace in the very near future. After that the question will be of course whether or not it trades back up to the current (or near future) highs.

Sentiment

NAAIM is back up around 100. The chart below is actually a week old but with the continued rally the reading will likely be higher this week.

The put/call ratio ema20 has worked it's way down to a level that has been seen at other market highs.

Rydex asset ratios (not shown) are still indicating conditions for a high.

The VIX is suitably low and touching the bottom Bollinger.

And lastly the CNN composite sentiment indicator is back up at excessively bullish levels, as you would expect given all of the above.

ASX

There's a few mixed messages going on at the moment...

Firstly BHP has recently hit a key resistance level.

Next the XSO. It is showing quite a lot of relative weakness when compared to the XJO or XAO.

On the XJO above there are a couple of other important points to note:

1. The rally over the last couple of days has meant that the index declined for 6 trading days and then hit a new high in less than half the time taken for the decline. This is usually a very bullish sign but it can also show up as an exhaustion to finish a move.

2. A reversal here will print a rather clear momentum divergence.

3. A reversal here (or just about anywhere actually) will print a very large divergence on the McClellan Summation Index (not shown).

4. The index is sitting in the region of former tops over the past six months. Reversals are usually better bets than breakouts.


So.... Most of the evidence at the moment points to some future downside however that fast move up this week may well be a sign that the obvious expectation is actually wrong.

SPX Double Top or Breakout?

As speculated during the last post the market reaction to Trump's election marked an extreme sentiment low and a rally has ensued for the past couple of weeks.

American indices are now back at or exceeding previous highs so the important question has now become whether the indices are en route to an extended breakout or on the verge of a reversal leaving double tops and false breaks on the board? Most breaks are false so at the moment I have a bearish bias but personal sentiment is a poor basis for analysis!


BREADTH

Firstly for the NYSE...

The Russell2000 and Nasdaq Composite Index can both give leading indications however at the moment it's a very mixed message. The Russell has been on an absolute tear with a significant break to higher highs the Nasdaq has been quite subdued, as can been seen by the index ratios in the following chart.

The McClellan Oscillator has printed a spike low and moved above zero. There is a small -ve divergence which is perhaps worth noting but that's about all... This indicator can diverge for soooo long!

The summation index is a bit simpler... After an extended decline it has now turned up for the longest run since July.

The cumulative NYAD is setup for some -ve divergence for the first time in a long while.

The NYAD ema20 (my favourite!) is again above zero but does not share a -ve divergence with the NYMO.

Bullish Percent has moved up but is still a long way below its August highs... So a clear -ve div. to my mind.

New lows are strange... They moved up as the election dived into the election low but they continued to rise as the market rose. It's such a big discrepancy it makes me think that there's something wrong with the data.

New highs quite possibly have a clue... The have risen during the recent rally but are now set up for a -ve divergence.

For the ASX the story is similar to the above although the XJO has not rallied anywhere near as high and the Summation Index has not made the same clear reversal.


SENTIMENT

The NAAIM sentiment number did not drop below 50 and has now spiked back above 80... into 'high' territory.

The equity put/call ratio has made a sharp reversal and is relatively neutral. It could mark a price high here but it is certainly not showing signs for a price low.

The VIX is now down below 13 again. At a level where tops are possible but it can stay here for a long time of course.

The close back inside the Bollinger Bands again proved to be a good indication of a lasting price turn.

SUMMARY

Price is now 10 trading days up from the low so if this is to be a 12 trading day move there is still a couple more days left to run out.

The Russell is strong and the Nasdaq is weak.

NYMO has a tiny weakness but the NYSI is strong.

Cumulative NYAD is moving up, but is diverging overall.

Sentiment is overly bullish but the trend is strongly up.

So many conflicting signals!

I think it's best not to ignore the obvious here which is that there are no clear conclusions.

There are some divergences in play and sentiment is back to a high level but breadth is not collapsing so it would be wrong to expect a sudden or immediate reversal.

XJO

What a wild couple of days!

BHP and RIO were down 5% intraday yesterday and made a massive bearish engulfing candle but today look set to gap up 5 to 10 %. The broader market made the same engulfing candle and today is set to gap up by close to 200 points!!

This could be a significant low but such wild moves make it difficult to get on board (or exit!) in either direction.

One thing I noticed is that the XJO picked a very tidy place to bottom yesterday, double bottom and 62 % retracement. If today closes up (which seems almost certain) there will also be some momentum divergence and McClellan Oscillator divergence adding weigh to the argument for a low.

Are we nearly there yet?

The perennial question!

It's been a couple of weeks since my last post so it's time for a more thorough review of the market status.

First up is a monthly chart of the SP500. This chart shows the PMO indicator but the story is the same with the MACD, RSI or whatever your favourite momentum indicator happens to be. With the momentum divergence shown there should be no surprise if we are at the onset of a large and fast price drop, or even a long term trend reversal.

BREADTH

This is a 3 year chart of the SP500 with 52 week new highs and lows shown. New lows have ticked up a little but have a long way to go before reaching any kind of extreme level.

The same chart zooming in to the past six months... Price is approaching the lower Keltner Channel which might mean something.

Moving on to other breadth measures. Bulkowski's CPI indicator is indicating down, as you would expect.

Bullish Percent is hard down.

The McClellan Oscillator has reached an 'oversold' level. This indicator however can just as easily make a spike low as it can build a broad divergence so prices can potentially continue to fall for some time yet.

The Summation Index (as with the Bullish Percent above) is hard down with no signs of a reversal or divergence.

The cumulative NYAD is confirming the trend.

The ema20 of the NYAD data is again tracking as per the McClellan Oscillator... Now reaching oversold levels but no divergence in place as yet.

SENTIMENT

Lots of charts today...

First up is the VIX. The VIX has moved so fast that it has closed outside of the Bollinger Bands for four days in a row! A close back inside the BB's is used by many traders as a reliable signal of a reversal (both up and down) so it's definitely something to keep an eye on at the moment.

Next is the same chart of the VIX but zooming out a little. The current level has marked numerous lows in the past so a bounce is probably not far off.

I'm copying Tom McClellan's 'VIX' chart posted on Twitter this week as well. it's fairly self explanatory and very interesting!

Next is the CNN Fear-Greed indicator. It has definitely reached a 'low worthy' level. Keep in mind that this is a composite indicator so the notable move over the last week may be due in large part to the rapid rise of the VIX.

The AAII sentiment indicators are again neutral to my eye. I'm not a great fan of this data actually but it has given indications for some good lows in the past.

The Rydex sentiment measures still have a long way to fall!

The NAAIM Exposure Index, which I quite like, has definitely started to change teams but it has a way to go yet...

And lastly the ema20 of the Equity Put/Call data. It is definitely on it's way up but not yet 'extreme' to my mind.

SUMMARY

The trend is down and my bearish stance over the last couple of months has at least started to materialise.

A few important indicators have reached 'oversold' levels so a bounce some time soon should be expected however the overall setup is still a tad too bearish for me to go looking too closely on the long side.

A couple of cycle analysts more knowledgeable than myself have been calling for a November 8th/9th low so those calls are looking very good at the moment. Perhaps the current situation is similar to January 2008 and we have one or two heavy down days ahead of us to exhaust the move!

The Smallest of Divergences

The NYSI (and ASX equivalent) has printed a very small negative divergence. On a longer time scale the NYSI divergences are looking very reliable but they are not quite so accurate when zoomed in to one or two weeks.

Longer term...