BROAD STOCK MARKET UPDATE (9:00 pm EST)
In last Monday's post on the broad stock market (Dec. 29), I wrote:
"We will see if the rally continues into New Year's Day this Thursday. If all three indices make new all-time highs next week, it could be at least a short-term bullish sign for this new medium-term cycle in equity markets. On the other hand, if the bearish divergence continues, this market could roll over and begin a significant correction down."
All three indices moved down slightly into New Year's day, but today they rallied with the DOW surging to a new all-time high. The S&P 500 and NASDAQ, however, did not make new highs, so our intermarket bearish divergence signal remains in place. These three indices began new medium-term cycles in late November 2025, so all three cycles are young and potentially bullish. A corrective sub-cycle dip is now due, and it may have already happened with that 4-day drop into Jan. 2. If so, we could now see more rallying and a chance for the S&P 500 and NASDAQ to make new all-time highs as we move into our next strong reversal zone coming up Jan. 13 - 23. The alternative bearish view might see the S&P 500 and NASDAQ staying below new highs and the market rolling over from a top in next week's reversal zone (or rolling over now and making a low in that same reversal window).
The bottom line here is that we need to see all three indices make new all-time highs soon to maintain this market's bullish trend. If that doesn't happen, and these indices start to fall below their November lows, the new medium-term cycles will turn bearish and continue moving down for many more weeks. In that case, we would likely be seeing the start of a serious, longer-term correction. I am staying on the sidelines of this market for now.
In last Monday's post on the broad stock market (Dec. 29), I wrote:
"We will see if the rally continues into New Year's Day this Thursday. If all three indices make new all-time highs next week, it could be at least a short-term bullish sign for this new medium-term cycle in equity markets. On the other hand, if the bearish divergence continues, this market could roll over and begin a significant correction down."
All three indices moved down slightly into New Year's day, but today they rallied with the DOW surging to a new all-time high. The S&P 500 and NASDAQ, however, did not make new highs, so our intermarket bearish divergence signal remains in place. These three indices began new medium-term cycles in late November 2025, so all three cycles are young and potentially bullish. A corrective sub-cycle dip is now due, and it may have already happened with that 4-day drop into Jan. 2. If so, we could now see more rallying and a chance for the S&P 500 and NASDAQ to make new all-time highs as we move into our next strong reversal zone coming up Jan. 13 - 23. The alternative bearish view might see the S&P 500 and NASDAQ staying below new highs and the market rolling over from a top in next week's reversal zone (or rolling over now and making a low in that same reversal window).
The bottom line here is that we need to see all three indices make new all-time highs soon to maintain this market's bullish trend. If that doesn't happen, and these indices start to fall below their November lows, the new medium-term cycles will turn bearish and continue moving down for many more weeks. In that case, we would likely be seeing the start of a serious, longer-term correction. I am staying on the sidelines of this market for now.
RSS Feed