The S&P 500 closed at record highs three times this last week. Price movement in the S&P 500 is following exactly The Dow Theory definition of a Bull Market, which is a trend marked by continuous Higher-Highs and Higher-Lows.
What is interesting is that the Higher-Highs and Higher-Lows being made on the S&P 500 chart are following a clear time cycle, meaning the time between each Higher-Low is nearly equal starting in late March of this year. If this pattern continues (a big if – time cycles are only relevant until the pattern is broken) then we should expect to see a pull-back beginning very soon and continuing until about October 11th. This would be true, even if the overall Bull Market is going to continue.
Also interesting is the fact that the Ichimoku Cloud is getting thinner and thinner. The Ichimoku Cloud predicts a region of support in an uptrend, with the thickness of the cloud suggesting the strength of the support. The thinning of the cloud is predicting weaker support. If the pullback happens at the same time cycle that the market has been following since March, and if price breaks down through the Ichimoku Cloud, then we could have something entirely different beginning to happen.
All speculation at this point, but worth watching. Meanwhile, the Bull Market is still alive and well.
Gold continues to prove our earlier thesis of a rally beginning. We had been saying for months that if Gold got above $1307, then that would signal a rally. Gold did break through $1307 two weeks ago and mad it all the way up to $1360. It pulled back a bit late last week, but that looks like the normal Higher-Highs and Higher-Lows that mark an uptrend. The probability is for the Gold rally to continue and that is what we will be trading.
Oil is also showing signs of the end of the downtrend that has marked most of 2017 so far. It is notable that Oil did not make new lows, but rather, but in a “Higher Low” at the end of August and appears ready to begin making Higher-Highs now. It is early in this uptrend, but it looks highly probable. A little early to trade it yet, but we are watching closely and will give updates.
That’s it for this week. Stay tuned for the next update. Keep your winners big and your loser’s small and have fun!