In last Thursday's blog on the broad stock market I wrote:
"A good target for a bottom in the DOW would be around 25,500 - 26,000 or possibly lower. A decline to the final cycle bottom normally lasts between 2-5 weeks. We are now entering another reversal zone for equities (May 1-9) so it's possible we could see the final bottom by the end of next week."
Today the DOW plummeted to a low of 25,517 just before noon, and it is now snapping back sharply. It's the last day of our reversal zone, and we are in the second week of the correction. The S&P 500 and NASDAQ are also in good target areas for a corrective bottom to their medium-term cycles. There's a good chance we are seeing a bottom now, and it looks like a good point to take profits and cover our short position in this market. We have done well with this trade that we entered on April 25 near the cycle top.
Could the market fall lower? Yes, that's possible, but the cycle timing and other technical signals are strongly pointing to a bottom now. If it does fall lower after today, we would probably expect the final bottom either at the end of this month or in the first two weeks of June. We are looking to buy the final bottom (whenever it happens - as long as it doesn't go too low) as we are expecting another strong rally into the summer. This final corrective fall was triggered by Trump's Trade Deal crisis with China. I would speculate that if this is not resolved soon, the markets could push lower. But Trump is famous for his sudden unexpected change of mind (and trouble with China is probably not good for his chances of getting re-elected in 2020) so I think there's a good chance this issue will be resolved soon. If it is, it could easily cause the stock market to soar back up. Taking profits and covering (unloading) my short position in the broad stock market today.