Sunday Update: 03 November 2019

We just completed the 4th consecutive week of market gains, each week growing more than the previous week.  The C fund closed at a new all-time high and the I fund has clearly broken out of its 6 month consolidation. For the week, the C fund was up 1.47%, S fund up 1.45%, and I fund up 1.49%.  On a weekly basis, the market is very strong and is likely to move higher. On a daily basis, prices are a bit extended and due for a breather…

Over the past couple of weeks the chart patterns have really strengthened up, decreasing market risk overall.   This week we’re going to focus on the weekly charts from a bullish perspective.  Having said that, one negative possibility is still on the table.  We will discuss that last.

C Fund 3 Year Weekly

The S&P500 (C Fund) closed the week at a new all-time high.  Prices moved higher by 1.47% on increasing volume AND established a clear breakout from the near term triangle pattern by taking out the July highs.  While we are not out of the woods yet, this week’s price action was very positive for stocks, helping to minimize market risk considerably.  A weekly close below 2950 would be a serious problem.

S Fund 3 Year Weekly

The weekly S and I fund charts are similar.  While the I fund is leading the S fund in terms of the chart pattern, both are setting up the same AB=CD pattern as the next bullish possibility.  The S and I funds have yet to exceed their respective 2018 highs.  If/when these highs are taken out, the S and I will have no overhead resistance.  Their next probable point of consolidation would be point D.  

I Fund 3 Year Weekly

The S fund has yet to break out of its 6 month consolidation pattern but the I fund clearly has.  The next likely point of resistance for the I fund is its 2018 high at approximately 72.  After that, point D is the next level where consolidation/correction is a possibility.

C Fund 3 Year Weekly

So far, this post has laid out the “best case” scenario going forward.  In my opinion , NO CRYSTAL BALL HERE, the best case scenario is most likely.  All three of the stock funds look strong but the I fund is really pushing me in a bullish direction.  While the S fund is still within its consolidation pattern, the I fund has clearly broken out.  The collective momentum is definitely up.  Having said all that, one near-term negative possibility remains.  

The expanding triangle pattern, that we have been discussing since June, is still on the table.  Until the C fund breaks definitively above the upper channel line, this pattern will remain a possibility.  IF the C fund were to roll over and post a weekly close below the short term lower trend line below, then the expanding triangle scenario would likely be in play.  IF this pattern were to play out, the S and I would roll over as well.  IF the S and I funds can take out their respective 2018 highs, AND the C fund can break definitively above the upper channel line, then we are out of the woods and likely moving significantly higher.    

Bottom Line: Market risk has decreased considerably over the past couple of weeks.  The I fund could very likely be leading us out of this 6 month consolidation.  We have upside targets, down side lines in the sand, and technical indicators pointing to higher prices on a weekly basis.  

Please post questions to comments or email.  Have a great week!

Jerry