UPDATE AND COMMENTS ON THE BROAD STOCK MARKET (3:00 pm EDT)
Today is a holiday in the U.S. (Independence Day, a.k.a "Fourth of July") and the stock market is closed. It will reopen tomorrow, but the trading will likely be thin as many people will be taking a long holiday week-end. Equities often rally into holidays, and all three of our market indices (DOW, S&P 500, NASDAQ) have done that. I thought today would be a good day to take an overview of this market and look at where we are in our current medium-term cycles.
All three indices started new medium-term cycles with their lows in mid-April (April 17 for the DOW and April 19 for the S&P 500 and NASDAQ). All three rose from there and exceeded the highs from their previous medium-term cycles (although the DOW did this by a small margin and may have made a bearish "double-top") before dropping down into their first sub-cycle corrections - their lows on May 30 (DOW) and May 31 (S&P 500 and NASDAQ). From there, the S&P 500 and NASDAQ have soared to new all-time highs, but the DOW has been floundering and has not (yet) exceeded its May 20 all-time high of 40,077. This is creating a VERY strong bearish divergence signal in this market.
A strong general reversal zone ends this week, but another one begins next Tuesday (July 9 - 18). A second sub-cycle correction is due (ideally) to bottom anytime by July 22. This means these indices should be topping out and rolling over very soon - either in this week's reversal zone or the one starting next week. Unless the DOW rockets up over the next several days, it looks like it will not exceed its all-time high of 40,077 before rolling over, and that would turn the cycle's trend bearish. If that happens, it would not bode well for the broad stock market as it could mean that a major longer-term correction is starting that could take all-three indices down to the final bottom of a 4-year cycle that is ideally due anytime between August and December with a potential 16 - 20% decline. (We also note that if a long-term 90-year cycle is in progress, the corrective decline would be even greater - possibly much greater).
Based on this analysis, I am not anxious to buy into this market right now. If the DOW can rally and make a new all-time high soon, I may change my mind (as there is a possibility of a "blow-off" top before a big correction). Otherwise, I may be favoring bearish or short-selling strategies in upcoming trades.
HAPPY FOURTH OF JULY TO ALL READERS !
Today is a holiday in the U.S. (Independence Day, a.k.a "Fourth of July") and the stock market is closed. It will reopen tomorrow, but the trading will likely be thin as many people will be taking a long holiday week-end. Equities often rally into holidays, and all three of our market indices (DOW, S&P 500, NASDAQ) have done that. I thought today would be a good day to take an overview of this market and look at where we are in our current medium-term cycles.
All three indices started new medium-term cycles with their lows in mid-April (April 17 for the DOW and April 19 for the S&P 500 and NASDAQ). All three rose from there and exceeded the highs from their previous medium-term cycles (although the DOW did this by a small margin and may have made a bearish "double-top") before dropping down into their first sub-cycle corrections - their lows on May 30 (DOW) and May 31 (S&P 500 and NASDAQ). From there, the S&P 500 and NASDAQ have soared to new all-time highs, but the DOW has been floundering and has not (yet) exceeded its May 20 all-time high of 40,077. This is creating a VERY strong bearish divergence signal in this market.
A strong general reversal zone ends this week, but another one begins next Tuesday (July 9 - 18). A second sub-cycle correction is due (ideally) to bottom anytime by July 22. This means these indices should be topping out and rolling over very soon - either in this week's reversal zone or the one starting next week. Unless the DOW rockets up over the next several days, it looks like it will not exceed its all-time high of 40,077 before rolling over, and that would turn the cycle's trend bearish. If that happens, it would not bode well for the broad stock market as it could mean that a major longer-term correction is starting that could take all-three indices down to the final bottom of a 4-year cycle that is ideally due anytime between August and December with a potential 16 - 20% decline. (We also note that if a long-term 90-year cycle is in progress, the corrective decline would be even greater - possibly much greater).
Based on this analysis, I am not anxious to buy into this market right now. If the DOW can rally and make a new all-time high soon, I may change my mind (as there is a possibility of a "blow-off" top before a big correction). Otherwise, I may be favoring bearish or short-selling strategies in upcoming trades.
HAPPY FOURTH OF JULY TO ALL READERS !
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