UPDATE ON THE BROAD STOCK MARKET (11:30 pm EST)
In last Thursday's blog on the broad stock market I wrote:
"For the DOW, a critical level now would be the 25,743 low that started the current medium-term cycle back on 10/3/19. In the S&P 500, there is critical support around 3,000, and in the NASDAQ around 8,800. A weekly close below these supports could be bad news for equity markets suggesting a strongly bearish trend and an even bigger correction."
Well, all three indices broke below their supports on Friday. This is not good news for equity markets. If these indices are moving to the final bottoms of older cycles, we could see those bottoms between now and March 10 (I am extending our Feb. 24 - March 6 reversal zone a bit to accommodate the strong momentum of this correction). The bottoms may have even happened last Friday (the middle of the reversal). From the final bottoms, we should expect a sharp rally, but because this correction has been so strong, that rally may be short-lived and followed by even more plunging to lower lows. We need to watch this carefully now. We may have a buy spot here for a short (but sharp) rally, but I think our main focus should be looking to sell short the top of any rally for a more serious correction down. Stay tuned for more updates next week. We are currently out of the broad stock market.
In last Thursday's blog on the broad stock market I wrote:
"For the DOW, a critical level now would be the 25,743 low that started the current medium-term cycle back on 10/3/19. In the S&P 500, there is critical support around 3,000, and in the NASDAQ around 8,800. A weekly close below these supports could be bad news for equity markets suggesting a strongly bearish trend and an even bigger correction."
Well, all three indices broke below their supports on Friday. This is not good news for equity markets. If these indices are moving to the final bottoms of older cycles, we could see those bottoms between now and March 10 (I am extending our Feb. 24 - March 6 reversal zone a bit to accommodate the strong momentum of this correction). The bottoms may have even happened last Friday (the middle of the reversal). From the final bottoms, we should expect a sharp rally, but because this correction has been so strong, that rally may be short-lived and followed by even more plunging to lower lows. We need to watch this carefully now. We may have a buy spot here for a short (but sharp) rally, but I think our main focus should be looking to sell short the top of any rally for a more serious correction down. Stay tuned for more updates next week. We are currently out of the broad stock market.
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