UPDATE ON THE BROAD STOCK MARKET (11:30 pm EDST)
Last week the broad stock market traded within a rather narrow range and remained relatively flat. There was no rally to challenge all-time highs in the DOW, S&P 500 or NASDAQ, and there were also no significant corrections. Thus we were not tempted to sell short at any high or buy any corrective low. Our current reversal zone, however, continues through the end of this week (and maybe even into the following week) so there is still time for a significant top or bottom to form. If this market rallies strongly now to test the all-time highs of these three indices (26,696 from April 23 in the DOW, 2,954 from May 1 in the S&P 500, and 8,176 from April 29 in the NASDAQ) by the end of this week then we will consider selling short, especially if one or two, but not all three indices, make new highs (bearish divergence). If "trade war" worries continue to plague the market, we could also see equities fall to a corrective low and a good spot to buy (as long as that low doesn't break below the June 3 lows that recently started new medium-term cycles in all three indices - i.e. 24,680 in the DOW, 2,729 in the S&P 500, and 7,292 in the NASDAQ). Breaking those lows would indicate that the new cycle is turning bearish very early and the market would continue down well into the summer. A good target for a correction that would keep this market bullish would be around 25,500 in the DOW and 2,825 in the S&P 500. Let's watch for those levels this week as a possible buying opportunity. Still on the sidelines of the broad stock market.
Last week the broad stock market traded within a rather narrow range and remained relatively flat. There was no rally to challenge all-time highs in the DOW, S&P 500 or NASDAQ, and there were also no significant corrections. Thus we were not tempted to sell short at any high or buy any corrective low. Our current reversal zone, however, continues through the end of this week (and maybe even into the following week) so there is still time for a significant top or bottom to form. If this market rallies strongly now to test the all-time highs of these three indices (26,696 from April 23 in the DOW, 2,954 from May 1 in the S&P 500, and 8,176 from April 29 in the NASDAQ) by the end of this week then we will consider selling short, especially if one or two, but not all three indices, make new highs (bearish divergence). If "trade war" worries continue to plague the market, we could also see equities fall to a corrective low and a good spot to buy (as long as that low doesn't break below the June 3 lows that recently started new medium-term cycles in all three indices - i.e. 24,680 in the DOW, 2,729 in the S&P 500, and 7,292 in the NASDAQ). Breaking those lows would indicate that the new cycle is turning bearish very early and the market would continue down well into the summer. A good target for a correction that would keep this market bullish would be around 25,500 in the DOW and 2,825 in the S&P 500. Let's watch for those levels this week as a possible buying opportunity. Still on the sidelines of the broad stock market.
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