BROAD STOCK MARKET UPDATE (11:30 pm EDST)
In last Monday's blog on the broad stock market I wrote:
"The "crash" so far has been 38% on the DOW (from the 29,568 all-time high on Feb. 12 to the 18,213 low on March 23). The market is now rallying off that 18,213 low. This may be the start of a very significant rally into the summer and maybe even into the November election OR we may soon make another lower low and then start that significant rally."
OK. It's looking like the March 23 low in the NASDAQ was very likely the start of a new medium-term cycle (bullish). March 23 may also be the start of new medium-term cycles in both the DOW and S&P 500, but this is not as certain. These two indices may still be completing the end of an older cycle and could fall lower than their March 23 lows (which would be short-term bearish). If the DOW and S&P 500 are still making new cycle lows, they could pull down the NASDAQ into a sub-cycle corrective dip which could give us a good entry point to go long in all three indices.
Last Tuesday, the S&P 500 and NASDAQ made new weekly highs but the DOW did not. That gave us a bearish divergence signal (in our current reversal zone), and sure enough, the markets fell sharply into the end of the week. Today, however, these indices are back up sharply (coronavirus fears seem to be subsiding a bit), but this time all three indices broke above last week's highs which now negates that bearish divergence signal. We are still in a reversal zone (it ends Tuesday) so the market could turn down from today's highs. But if the rally continues tomorrow, it will make a good case for March 23 being the start of a new medium-term cycle in all three indices, and that would be at least short-term bullish for this market.
As far as trading goes, I would look to buy if the DOW or S&P 500 make new lows (below March 23 lows) now, but if they don't, I'm not anxious to chase this rally, at least not at the moment. I'm starting to question my previously bullish view of a strong rally into the second half of this year. If we get a good rally into mid-May, it's possible that could be it - i.e. we could see a top then (below the all-time highs of February) followed by a very severe correction well below those March 23 lows. I apologize for being a bit uncertain about this market, but we are in unusually volatile times, and market trends can shift rapidly. How bullish this market will be in the short-term is questionable, but I am still holding to the idea (for now) that the all-time highs of February will not be exceeded this year and that the market will resume it's longer-term correction down below the lows of March 23. We will stay on the sidelines of this market for now.
In last Monday's blog on the broad stock market I wrote:
"The "crash" so far has been 38% on the DOW (from the 29,568 all-time high on Feb. 12 to the 18,213 low on March 23). The market is now rallying off that 18,213 low. This may be the start of a very significant rally into the summer and maybe even into the November election OR we may soon make another lower low and then start that significant rally."
OK. It's looking like the March 23 low in the NASDAQ was very likely the start of a new medium-term cycle (bullish). March 23 may also be the start of new medium-term cycles in both the DOW and S&P 500, but this is not as certain. These two indices may still be completing the end of an older cycle and could fall lower than their March 23 lows (which would be short-term bearish). If the DOW and S&P 500 are still making new cycle lows, they could pull down the NASDAQ into a sub-cycle corrective dip which could give us a good entry point to go long in all three indices.
Last Tuesday, the S&P 500 and NASDAQ made new weekly highs but the DOW did not. That gave us a bearish divergence signal (in our current reversal zone), and sure enough, the markets fell sharply into the end of the week. Today, however, these indices are back up sharply (coronavirus fears seem to be subsiding a bit), but this time all three indices broke above last week's highs which now negates that bearish divergence signal. We are still in a reversal zone (it ends Tuesday) so the market could turn down from today's highs. But if the rally continues tomorrow, it will make a good case for March 23 being the start of a new medium-term cycle in all three indices, and that would be at least short-term bullish for this market.
As far as trading goes, I would look to buy if the DOW or S&P 500 make new lows (below March 23 lows) now, but if they don't, I'm not anxious to chase this rally, at least not at the moment. I'm starting to question my previously bullish view of a strong rally into the second half of this year. If we get a good rally into mid-May, it's possible that could be it - i.e. we could see a top then (below the all-time highs of February) followed by a very severe correction well below those March 23 lows. I apologize for being a bit uncertain about this market, but we are in unusually volatile times, and market trends can shift rapidly. How bullish this market will be in the short-term is questionable, but I am still holding to the idea (for now) that the all-time highs of February will not be exceeded this year and that the market will resume it's longer-term correction down below the lows of March 23. We will stay on the sidelines of this market for now.
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