It's starting to look like the DOW and S&P 500 both started new medium-term cycles with their bottoms on Oct.13 (28,661 and 3,491, respectively). Both indices have risen sharply from those lows (especially the DOW) which is typical at the start of new cycles. Other technical indicators are also bullish now which suggests that we could see more rallying for at least several more weeks, possibly to challenge the January all-time highs. Nevertheless, this current rally may be peaking now in a very strong reversal zone, so a correction down could be imminent. Because this market still looks bullish, I am going to take the strategy of waiting for a sub-cycle corrective low to buy for more rallying into December. Good targets for a corrective low could be around 30,700 in the DOW and 3,700 in the S&P 500. If any correction goes much lower than these targets, we may have to give up our bullish view of the new cycle.
If bullish, these indices should be able to break above their Aug. 16 highs (after the corrective dip) and then continue a rally towards those Jan. highs. I don't think all three of our broad stock market indices (DOW, S&P 500, and NASDAQ) will exceed those highs because it still looks like January was the top of a very long-term (possibly 90 year) cycle that can go a lot lower than the October lows before it reaches its final corrective bottom. So even though this market may be short-term bullish (following an imminent corrective dip), we still consider the longer-term cycle bearish and will be looking to sell short the top of any rally we might get into December or early next year (as long as those all-time highs are not broken.- 36,953 in the DOW, 4,819 in the S&P 500, and 16,212 in the NASDAQ).