IWM has a dependable history of topping ahead of the SPX. This is taking place again today with IWM peaking on 3/15 and correcting ever since. It may only be alerting us to an intermediate top in SPX which could bring about a two/three-week correction before it undertakes another phase toward a more important top.

SPX daily chart

On Friday, SPX reached the top of the channels that I had drawn on the chart the week before: a small dark-blue channel from 3723, and the orange intermediate channel, the top line of which started from 3646. These were expected to create some resistance for the move from 3853 which had a partial projection target of about 4100. But Friday’s action indicated that 4130- 35 could be reached before a minor consolidation takes place and is followed by a move to about 4180 to complete the current phase. After a 2 to 3-week correction, we could then start on the final bullish trend from 3723 to about 4350, from which a larger correction would be expected.

In the comments that I made above about IWM, I suggested that the latter was a warning of an SPX top. That would probably be the end of the move expected to come around 4180-4200. That warning is also appearing in the daily CCI (below) in the form of negative divergence.

SPX hourly chart

On the hourly chart, I have added one more short-term channel to define the second phase which is progressing within the dark-blue channel from 3853. It shows that the move could extend beyond the outside of the larger blue and orange channels -- perhaps even before the current phase is complete. But the resistance encountered at Friday’s close (which corresponds to ~4130 on the P&F chart) suggests that a near-term pullback should occur before we end the second phase around 4180-4200.

The divergence which is showing in the CCI is also warning that a reversal is close, but because the oscillator still has a strong positive value there may be only a short pull back and then a move to the final high of this phase before the indicator goes negative and gives a sell signal.

UUP (dollar ETF) DLY ($USD chart is not available from this data provider)

UUP found resistance at the 200-dma and at the trend line drawn as a parallel to the lower channel line, and this caused a minor pullback to a mid-channel line of the short-term uptrend channel, which could hold the price for a little while. Even if it continues lower, it is likely to find support at the bottom of the channel and reverse. We will then see if UUP continues its uptrend, or if some additional base building is required before attempting another uptrend.

GDX (gold miners)-DLY

GDX took advantage of a pullback in UUP to start on another move slightly higher. Trend lines and parallels have worked well on this index and it seems to be pushing through a secondary trend line, which could lead to testing the top of the corrective channel around 35.50. How it is repulsed by that trend line will give us an indication of whether and when it can break through the top of the channel and end its correction.

PAAS (Pan American Silver Corp-DLY)

PAAS is about to run into some resistance which can end its short-term uptrend. Its correction has spanned a broader channel than GDX, so it is still a long way from the top of its corrective channel top, but it is pushing above the original downtrend line and this is important. Still, like GDX, it moves with SPX and may require some additional consolidation of another two or three weeks before it is ready to resume its uptrend.

BNO (Brent oil fund) DLY

BNO is finding support on its 50-dma. If it breaks below it, this could extend its correction by several weeks.

Summary

SPX should end its second phase from 3723 around 4180-4200 and reverse for a two/three-week correction before starting on the third and final phase of this intermediate uiptrend.

Author

Andre Gratian

Market Turning Points

When I was a stock broker years ago, a friend introduced me to technical analysis of the market and it is not an exaggeration to say that I fell in love with this approach! Ever since then, it has become an increasingly important

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.