UPDATE ON THE BROAD STOCK MARKET (6:00 pm EDST)
Today's plunge in the broad stock market is reflecting ongoing fears of U.S./China "trade wars". Adding to these jitters was a public statement by Robert Mueller essentially saying that his investigation of President Trump did not prove that he didn't commit a crime. This is firing up the Democrat's determination to pursue impeachment and practically guarantees more divisiveness and fighting in Congress into next year's election. Wall Street never likes political instability.
Unfortunately, we were stopped out of our just acquired long position with a small loss as all three market indices (DOW, S&P 500, and NASDAQ) broke to new lows (with the DOW and S&P 500 well below their May 13 lows). This means that all three indices are most likely moving to the final bottoms of older medium-term cycles (i.e. new cycles did not start on May 13). These older medium-term cycles are due to bottom shortly (over the next several weeks) so we now look to our next reversal zones for a likely final bottom. There is a rather weak reversal zone for equities this week and next (May 29 - June 5). We could see a bottom there, but there is a much stronger (and wider) reversal period coming up June 7 - 27 (with likely pivot points June 14 and June 24). I am favoring a bottom somewhere in that time period. A good target range for a bottom in the DOW would now be around 24,200 - 25,000 (today we touched the upper part of this range). For the S&P 500 that range could be 2,650 - 2,750. We will now watch for a bottom in these ranges in one of the reversal zones just mentioned. As long as any bottom stays within these ranges, we will again look to go long as we are still anticipating another strong rally into the summer. If these indices move significantly below these ranges, however, we may have to abandon our bullish view as we could be seeing the start of a severe collapse in the broad stock market.
Today's plunge in the broad stock market is reflecting ongoing fears of U.S./China "trade wars". Adding to these jitters was a public statement by Robert Mueller essentially saying that his investigation of President Trump did not prove that he didn't commit a crime. This is firing up the Democrat's determination to pursue impeachment and practically guarantees more divisiveness and fighting in Congress into next year's election. Wall Street never likes political instability.
Unfortunately, we were stopped out of our just acquired long position with a small loss as all three market indices (DOW, S&P 500, and NASDAQ) broke to new lows (with the DOW and S&P 500 well below their May 13 lows). This means that all three indices are most likely moving to the final bottoms of older medium-term cycles (i.e. new cycles did not start on May 13). These older medium-term cycles are due to bottom shortly (over the next several weeks) so we now look to our next reversal zones for a likely final bottom. There is a rather weak reversal zone for equities this week and next (May 29 - June 5). We could see a bottom there, but there is a much stronger (and wider) reversal period coming up June 7 - 27 (with likely pivot points June 14 and June 24). I am favoring a bottom somewhere in that time period. A good target range for a bottom in the DOW would now be around 24,200 - 25,000 (today we touched the upper part of this range). For the S&P 500 that range could be 2,650 - 2,750. We will now watch for a bottom in these ranges in one of the reversal zones just mentioned. As long as any bottom stays within these ranges, we will again look to go long as we are still anticipating another strong rally into the summer. If these indices move significantly below these ranges, however, we may have to abandon our bullish view as we could be seeing the start of a severe collapse in the broad stock market.
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