UPDATE ON THE BROAD STOCK MARKET (11:30 pm EST)
In my last post (Nov.28) on the broad stock market, I wrote:
"...we are well into the current medium-term cycles in all three broad stock market indices (DOW, S&P 500, NASDAQ), and we are waiting for the final corrective descent into the final cycle bottoms for all three. That corrective fall should last 2 -5 weeks. Both the S&P 500 and NASDAQ satisfied that requirement with last Friday's lows, but the DOW did not. This makes me think the DOW will turn down before making a new high and push lower to its final cycle bottom soon."
The DOW did not turn down for a lower low as I had expected, and instead it rallied to new all-time highs. This means we will have to accept Nov. 20 as an unusually brief one-week decline to a final medium-term cycle bottom in the DOW, along with the Nov. 21 lows in the S&P 500 and NASDAQ as (normal) bottoms for their respective medium-term cycles. From these bottoms, new cycles rallied, and the DOW made a new all-time high (48,886 last Friday). The S&P 500 and NASDAQ, however, did not make new all-time highs last week, and all three indices MAY be rolling over this week. I emphasize "maybe" because this is the week before Christmas, and equity markets often manifest a bullish "Santa Claus" rally at this time. Such a rally could push all three indices higher and negate the current bearish divergence between them.
But the market could also be headed down from here. Last week's highs were inside a general reversal zone
(Nov. 10 - 22). So the tops could be in for a significant correction down. Until the current bearish divergence signal in this market is negated by both the S&P 500 and NASDAQ making new all-time highs, I am not comfortable going long, even in this early phase of the new medium-term cycles. And as I've mentioned before, we shouldn't forget that several longer-term cycles are due soon, which could bring about a very severe correction in equity markets. That correction could start any time now. For these reasons, I am remaining on the sidelines of the broad stock market for now.
In my last post (Nov.28) on the broad stock market, I wrote:
"...we are well into the current medium-term cycles in all three broad stock market indices (DOW, S&P 500, NASDAQ), and we are waiting for the final corrective descent into the final cycle bottoms for all three. That corrective fall should last 2 -5 weeks. Both the S&P 500 and NASDAQ satisfied that requirement with last Friday's lows, but the DOW did not. This makes me think the DOW will turn down before making a new high and push lower to its final cycle bottom soon."
The DOW did not turn down for a lower low as I had expected, and instead it rallied to new all-time highs. This means we will have to accept Nov. 20 as an unusually brief one-week decline to a final medium-term cycle bottom in the DOW, along with the Nov. 21 lows in the S&P 500 and NASDAQ as (normal) bottoms for their respective medium-term cycles. From these bottoms, new cycles rallied, and the DOW made a new all-time high (48,886 last Friday). The S&P 500 and NASDAQ, however, did not make new all-time highs last week, and all three indices MAY be rolling over this week. I emphasize "maybe" because this is the week before Christmas, and equity markets often manifest a bullish "Santa Claus" rally at this time. Such a rally could push all three indices higher and negate the current bearish divergence between them.
But the market could also be headed down from here. Last week's highs were inside a general reversal zone
(Nov. 10 - 22). So the tops could be in for a significant correction down. Until the current bearish divergence signal in this market is negated by both the S&P 500 and NASDAQ making new all-time highs, I am not comfortable going long, even in this early phase of the new medium-term cycles. And as I've mentioned before, we shouldn't forget that several longer-term cycles are due soon, which could bring about a very severe correction in equity markets. That correction could start any time now. For these reasons, I am remaining on the sidelines of the broad stock market for now.
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