BROAD STOCK MARKET TRADE ALERT (3:30 pm EDT)
We are now out of our general reversal zone and will not enter another strong one until the second week of October. Although we still have a bearish divergence in the broad stock market (the DOW and S&P 500 continue to make new all-time highs without the NASDAQ), there are several other technical and cycle patterns suggesting this market is bullish.
All three indices started new medium-term cycles with their lows on Aug. 5. The S&P 500 and NASDAQ made their first sub-cycle corrective lows on Sept. 6, and the DOW did this on Sept. 11. From those lows, all three indices have made new highs (in their medium-term cycles) which means their cycle trends are bullish. Yes, the NASDAQ still hasn't made a new ALL-TIME high, but it does not have to rally much to do that.
In my September 12 blog I wrote about the possibility of a 6-year longer-term cycle overriding a shorter 4-year cycle and turning the market bullish:
" ...it all depends on whether this market is exhibiting a 4-year longer-term cycle or a 6-year longer-term cycle. If the 6-year cycle is operative, we could see new all-time highs into 2025. If a 4-year cycle is unfolding, the current medium-term cycles will turn bearish and make new lows..."
It's starting to look like the 6-year cycle is unfolding. If so, our new medium-term cycles could also be the start of a new 50 week cycle, and the market could now be very bullish. Unfortunately, this means we need to bail out of our short position in the broad stock market with a loss (about 6%). I am therefore going to cover (unload) my short position in the DOW today.
We are still anticipating a major correction in this market (at least 16% - 26%) relatively soon, but if a 6-year longer-term cycle is in place, we may have to wait a bit longer before it happens. It's important to note here that if a 6-year cycle is operative, we are already 4 years into this cycle, so a final top may not be far away. I will discuss this in more detail as we move forward. As far as shorter-term trading strategy goes, we may now be looking to go long on any significant corrections in this market.
We are now out of our general reversal zone and will not enter another strong one until the second week of October. Although we still have a bearish divergence in the broad stock market (the DOW and S&P 500 continue to make new all-time highs without the NASDAQ), there are several other technical and cycle patterns suggesting this market is bullish.
All three indices started new medium-term cycles with their lows on Aug. 5. The S&P 500 and NASDAQ made their first sub-cycle corrective lows on Sept. 6, and the DOW did this on Sept. 11. From those lows, all three indices have made new highs (in their medium-term cycles) which means their cycle trends are bullish. Yes, the NASDAQ still hasn't made a new ALL-TIME high, but it does not have to rally much to do that.
In my September 12 blog I wrote about the possibility of a 6-year longer-term cycle overriding a shorter 4-year cycle and turning the market bullish:
" ...it all depends on whether this market is exhibiting a 4-year longer-term cycle or a 6-year longer-term cycle. If the 6-year cycle is operative, we could see new all-time highs into 2025. If a 4-year cycle is unfolding, the current medium-term cycles will turn bearish and make new lows..."
It's starting to look like the 6-year cycle is unfolding. If so, our new medium-term cycles could also be the start of a new 50 week cycle, and the market could now be very bullish. Unfortunately, this means we need to bail out of our short position in the broad stock market with a loss (about 6%). I am therefore going to cover (unload) my short position in the DOW today.
We are still anticipating a major correction in this market (at least 16% - 26%) relatively soon, but if a 6-year longer-term cycle is in place, we may have to wait a bit longer before it happens. It's important to note here that if a 6-year cycle is operative, we are already 4 years into this cycle, so a final top may not be far away. I will discuss this in more detail as we move forward. As far as shorter-term trading strategy goes, we may now be looking to go long on any significant corrections in this market.
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