BROAD STOCK MARKET UPDATE (11:30 pm EST)
On Jan. 26, I wrote about the broad stock market:
" ...looks bullish, but to confirm this, they all [three indices] have to make new highs soon, and the NASDAQ has to break above its all-time high of 24,020 from last October to negate its bearish divergence to the other two indices. Until that happens, there is still the danger of this market turning bearish and taking a deep correction. We are now out of a strong reversal zone, but there is a weaker one coming up Feb. 2 - 11. We could see a significant low or a significant high in that time frame."
Well, all three indices DID make new all-time highs (the NASDAQ and S&P 500 on Jan. 28, and the DOW on Feb. 3). This means this market's trend is still bullish. Since those highs, however, only the DOW has made another new high (50,512, yesterday). The S&P 500 is close to a new high, but the NASDAQ is well below its Jan. 28 high, which gives us another strong intermarket bearish divergence signal. We are at the end of the Feb. 2-11 reversal zone, and these indices are rising. A top could be forming now, and this market could roll over, but if the bullish trend persists, we could see more rallying. If that rallying continues into our next strong general reversal zone (Feb.24 - March 4), THAT could be the final top in the current medium-term cycles of these indices, and a steep correction could follow (it is late in all three medium-term cycles).
As I have mentioned before, it is very late in some longer-term cycles in this market, especially an 18-year cycle (we are in the 17th year) and possibly a 90-year cycle (now overdue, if it is to happen). This means that a serious correction could begin any time now. An 18-year correction could see a 35% - 67% drop in the DOW, but if it occurs simultaneously with a 90-year correction, the drop could be even greater than 67%. Nevertheless, the short-term picture seems to be bullish, and a "blow-off" would not be out of the question in the late stages of these cycles.
For now, I'm staying on the sidelines, at least until we see the final corrective drop in our medium-term cycles. That bottom may not be far away - possibly next month. But first, the final top has to happen (if it hasn't already), and that could be this week, next week, or even the week after (if the bullish energy - irrational exuberance?, Trumphoria? -continues).
On Jan. 26, I wrote about the broad stock market:
" ...looks bullish, but to confirm this, they all [three indices] have to make new highs soon, and the NASDAQ has to break above its all-time high of 24,020 from last October to negate its bearish divergence to the other two indices. Until that happens, there is still the danger of this market turning bearish and taking a deep correction. We are now out of a strong reversal zone, but there is a weaker one coming up Feb. 2 - 11. We could see a significant low or a significant high in that time frame."
Well, all three indices DID make new all-time highs (the NASDAQ and S&P 500 on Jan. 28, and the DOW on Feb. 3). This means this market's trend is still bullish. Since those highs, however, only the DOW has made another new high (50,512, yesterday). The S&P 500 is close to a new high, but the NASDAQ is well below its Jan. 28 high, which gives us another strong intermarket bearish divergence signal. We are at the end of the Feb. 2-11 reversal zone, and these indices are rising. A top could be forming now, and this market could roll over, but if the bullish trend persists, we could see more rallying. If that rallying continues into our next strong general reversal zone (Feb.24 - March 4), THAT could be the final top in the current medium-term cycles of these indices, and a steep correction could follow (it is late in all three medium-term cycles).
As I have mentioned before, it is very late in some longer-term cycles in this market, especially an 18-year cycle (we are in the 17th year) and possibly a 90-year cycle (now overdue, if it is to happen). This means that a serious correction could begin any time now. An 18-year correction could see a 35% - 67% drop in the DOW, but if it occurs simultaneously with a 90-year correction, the drop could be even greater than 67%. Nevertheless, the short-term picture seems to be bullish, and a "blow-off" would not be out of the question in the late stages of these cycles.
For now, I'm staying on the sidelines, at least until we see the final corrective drop in our medium-term cycles. That bottom may not be far away - possibly next month. But first, the final top has to happen (if it hasn't already), and that could be this week, next week, or even the week after (if the bullish energy - irrational exuberance?, Trumphoria? -continues).
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