BROAD STOCK MARKET TRADE ALERT (3:00 pm EST)
It appears that I was a little too optimistic about yesterday's drop in the broad stock market and was underestimating the power of "irrational exuberance", "Trumphoria", and the holiday spirit to still give us a Santa Claus rally into the end of the year (maybe). All three market indices (DOW, S&P 500, and NASDAQ) are rallying strongly today, and the NASDAQ finally broke above 6,914 to make a new all-time high. Thus our bearish divergence signal has been negated and we should be stopped out of our short position in the broad stock market. We enter another reversal zone next week and still another stronger reversal zone Christmas week so we should still be on the lookout for a top in this market as the medium-term cycle is coming to an end and a correction is now due. We may get another bearish divergence signal next week, but at this point I would prefer to see a top near the Christmas and New Year's holiday as that would be a better reversal point for a correction. We were stopped out (unloaded or covered) our short position today and are back on the sidelines of the broad stock market for now.
It appears that I was a little too optimistic about yesterday's drop in the broad stock market and was underestimating the power of "irrational exuberance", "Trumphoria", and the holiday spirit to still give us a Santa Claus rally into the end of the year (maybe). All three market indices (DOW, S&P 500, and NASDAQ) are rallying strongly today, and the NASDAQ finally broke above 6,914 to make a new all-time high. Thus our bearish divergence signal has been negated and we should be stopped out of our short position in the broad stock market. We enter another reversal zone next week and still another stronger reversal zone Christmas week so we should still be on the lookout for a top in this market as the medium-term cycle is coming to an end and a correction is now due. We may get another bearish divergence signal next week, but at this point I would prefer to see a top near the Christmas and New Year's holiday as that would be a better reversal point for a correction. We were stopped out (unloaded or covered) our short position today and are back on the sidelines of the broad stock market for now.
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