BROAD STOCK MARKET UPDATE (4:30 pm EDT)
We had yet another FOMC meeting this week that ended at 2:00 pm today with the Fed announcing no change in interest rates this month. The Fed did suggest, however, that there would likely be two more hikes this year to get the benchmark rate between 5.5% and 5.75%. That rhetoric was a bit more aggressive than what analysts and economists had been expecting. The markets didn't respond well to this. Despite the rate pause, equities dropped sharply after the 2 pm announcement, but they rebounded and recovered most of that loss by the end of the day. I suspect today's announcement will have little impact on the broad stock market beyond today's short-term fluctuation.
The labeling of our medium-term cycles in the DOW and S&P 500 are clear now. Both began from lows in mid-March (31,430 on March 15 for the DOW and 3,809 on March 13 for the S&P 500). Both have rallied bullishly from those lows (especially the S&P 500) with significant sub-cycle corrections along the way, and both are now rallying to their final peak which will be followed by a sharp correction down to their final medium-term cycle bottoms. The final bottom in the DOW is due 5 - 8 weeks from now. Depending on the labeling of the S&P's sub-cycles, its final medium-term bottom could be due by the end of this month or possibly the end of July. The big question now is how high will these indices rally before topping out and falling to those bottoms?
The S&P 500 has been making new cycle highs every week over the last several weeks while the DOW just yesterday broke briefly above its May 1 high of 34,258 and closed the day below it (at 34,212). If the DOW can close above that May 1 high, its cycle will officially turn bullish (like the S&P 500) and we could see more rallying. But all three of our indices DOW, S&P 500, and the NASDAQ have been rising steeply and may be ready to take at least a small corrective dip. We are entering a relatively weak general reversal zone today (June 13 - 22), so a top and some sort of correction could be imminent. I am going to guess that such a correction (if it happens) will be minor. A more likely time for a significant top would be in a very strong reversal zone coming up at the end of the month (June 26 - July 5).
We will stay on the sidelines of the broad stock market for now as we watch for a possible top in our current weak reversal zone (June 13-22) and a minor correction. if that correction continues to fall into our next strong reversal zone around June 29 (June 26 - July 5), we may look to buy. But a continued rally into June 29 would probably have us selling short.
We had yet another FOMC meeting this week that ended at 2:00 pm today with the Fed announcing no change in interest rates this month. The Fed did suggest, however, that there would likely be two more hikes this year to get the benchmark rate between 5.5% and 5.75%. That rhetoric was a bit more aggressive than what analysts and economists had been expecting. The markets didn't respond well to this. Despite the rate pause, equities dropped sharply after the 2 pm announcement, but they rebounded and recovered most of that loss by the end of the day. I suspect today's announcement will have little impact on the broad stock market beyond today's short-term fluctuation.
The labeling of our medium-term cycles in the DOW and S&P 500 are clear now. Both began from lows in mid-March (31,430 on March 15 for the DOW and 3,809 on March 13 for the S&P 500). Both have rallied bullishly from those lows (especially the S&P 500) with significant sub-cycle corrections along the way, and both are now rallying to their final peak which will be followed by a sharp correction down to their final medium-term cycle bottoms. The final bottom in the DOW is due 5 - 8 weeks from now. Depending on the labeling of the S&P's sub-cycles, its final medium-term bottom could be due by the end of this month or possibly the end of July. The big question now is how high will these indices rally before topping out and falling to those bottoms?
The S&P 500 has been making new cycle highs every week over the last several weeks while the DOW just yesterday broke briefly above its May 1 high of 34,258 and closed the day below it (at 34,212). If the DOW can close above that May 1 high, its cycle will officially turn bullish (like the S&P 500) and we could see more rallying. But all three of our indices DOW, S&P 500, and the NASDAQ have been rising steeply and may be ready to take at least a small corrective dip. We are entering a relatively weak general reversal zone today (June 13 - 22), so a top and some sort of correction could be imminent. I am going to guess that such a correction (if it happens) will be minor. A more likely time for a significant top would be in a very strong reversal zone coming up at the end of the month (June 26 - July 5).
We will stay on the sidelines of the broad stock market for now as we watch for a possible top in our current weak reversal zone (June 13-22) and a minor correction. if that correction continues to fall into our next strong reversal zone around June 29 (June 26 - July 5), we may look to buy. But a continued rally into June 29 would probably have us selling short.
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