BROAD STOCK MARKET UPDATE (11:30 pm EDT)
Despite the chaos and controversy surrounding President Trump's "trade wars", the broad stock market continues to rally strongly - either supportive of Trump's tariffs or oblivious to them. All three of our indices (DOW, S&P 500, NASDAQ) continue to make new all-time highs, but our medium-term cycle analysis indicates we should expect another corrective drop soon.
We're assuming new medium-term cycles began in all three indices with their lows on September 2. From there, all three indices rose into early October. The DOW made a high on Oct. 3 (47,049) and then took a 5-day sub-cycle dip before resuming its rally. The S&P 500 and NASDAQ, however, made highs on Oct. 9 and 10, respectively, but followed those highs with only a one-day correction. These latter two indices have bypassed a normal 2 - 5 day sub-cycle correction and continue to rally. Based on cycle timing, we can expect a steep sub-cycle correction in all three indices soon, which may give us a buying opportunity in this bullish market.
We enter another general reversal zone tomorrow (October 29 - November 5), and after that, the month of November is filled with back-to-back reversal zones (Nov. 6 - 17, very strong; Nov. 18 -27, moderately strong; and Nov. 25 - Dec. 3, very strong). Equity markets could be quite a roller coaster ride over the next 5 weeks, so we need to be careful with any trading. The first thing we should be watching for is a top in one of these reversal zones, followed by a sharp correction down. If the correction doesn't go too low, it could give us a good spot to buy, especially as every day in November is a potential turning point. For now, we remain on the sidelines of the broad stock market.
Despite the chaos and controversy surrounding President Trump's "trade wars", the broad stock market continues to rally strongly - either supportive of Trump's tariffs or oblivious to them. All three of our indices (DOW, S&P 500, NASDAQ) continue to make new all-time highs, but our medium-term cycle analysis indicates we should expect another corrective drop soon.
We're assuming new medium-term cycles began in all three indices with their lows on September 2. From there, all three indices rose into early October. The DOW made a high on Oct. 3 (47,049) and then took a 5-day sub-cycle dip before resuming its rally. The S&P 500 and NASDAQ, however, made highs on Oct. 9 and 10, respectively, but followed those highs with only a one-day correction. These latter two indices have bypassed a normal 2 - 5 day sub-cycle correction and continue to rally. Based on cycle timing, we can expect a steep sub-cycle correction in all three indices soon, which may give us a buying opportunity in this bullish market.
We enter another general reversal zone tomorrow (October 29 - November 5), and after that, the month of November is filled with back-to-back reversal zones (Nov. 6 - 17, very strong; Nov. 18 -27, moderately strong; and Nov. 25 - Dec. 3, very strong). Equity markets could be quite a roller coaster ride over the next 5 weeks, so we need to be careful with any trading. The first thing we should be watching for is a top in one of these reversal zones, followed by a sharp correction down. If the correction doesn't go too low, it could give us a good spot to buy, especially as every day in November is a potential turning point. For now, we remain on the sidelines of the broad stock market.
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