BROAD STOCK MARKET UPDATE (11:30 pm EST)
It's still not clear if the broad stock market started a new medium-term cycle on Nov. 4 or if a much older cycle is still in place and falling to its final bottom. That final bottom (older cycle) would be due (overdue) now, and Monday's new weekly lows in the DOW, S&P 500, and NASDAQ may have been it as a strong rally seems to be taking off from there. All three indices are now testing their 15-day and 45-day moving averages, and if they can close above both, it will be strong evidence that the correction is over. That would mean the start of a new medium-term cycle that should soon test and likely exceed the recent all-time highs.
But wait...there's more to consider here. There's a good chance that a longer-term 50 week cycle is nearing completion. In fact, the bottom to that cycle is overdue and should coincide with the end of a medium-term cycle. The minimal target for the 50 week cycle should be around 40,0000 in the DOW and 5,600 in the S&P 500. These indices are still a good distance above those levels, so that suggests this market could fall further (below Monday's lows). There was a minor "pivot point" for equities on Monday, but there is a much stronger general reversal zone coming up next week (Jan. 22 - 30). We cannot rule out this market turning back down to make a final medium-term and long-term cycle bottom in this upcoming strong reversal window. For this reason, I am remaining on the sidelines of the broad stock market for now.
If the current rally gains legs and starts closing above the 14-day and 45-day moving averages, we could see a significant top form in the upcoming reversal zone, and that would be even more reason to stay out of the market as another steep drop could be in the cards. On the other hand, a new low at or below those targets mentioned above (40,000 in the DOW and 5,600 in the S&P 500) happening inside that Jan. 22 - 30 window could give us a very good buying opportunity as it would likely be the start of a new medium-term AND a 50 week cycle. Stay tuned for updates.
It's still not clear if the broad stock market started a new medium-term cycle on Nov. 4 or if a much older cycle is still in place and falling to its final bottom. That final bottom (older cycle) would be due (overdue) now, and Monday's new weekly lows in the DOW, S&P 500, and NASDAQ may have been it as a strong rally seems to be taking off from there. All three indices are now testing their 15-day and 45-day moving averages, and if they can close above both, it will be strong evidence that the correction is over. That would mean the start of a new medium-term cycle that should soon test and likely exceed the recent all-time highs.
But wait...there's more to consider here. There's a good chance that a longer-term 50 week cycle is nearing completion. In fact, the bottom to that cycle is overdue and should coincide with the end of a medium-term cycle. The minimal target for the 50 week cycle should be around 40,0000 in the DOW and 5,600 in the S&P 500. These indices are still a good distance above those levels, so that suggests this market could fall further (below Monday's lows). There was a minor "pivot point" for equities on Monday, but there is a much stronger general reversal zone coming up next week (Jan. 22 - 30). We cannot rule out this market turning back down to make a final medium-term and long-term cycle bottom in this upcoming strong reversal window. For this reason, I am remaining on the sidelines of the broad stock market for now.
If the current rally gains legs and starts closing above the 14-day and 45-day moving averages, we could see a significant top form in the upcoming reversal zone, and that would be even more reason to stay out of the market as another steep drop could be in the cards. On the other hand, a new low at or below those targets mentioned above (40,000 in the DOW and 5,600 in the S&P 500) happening inside that Jan. 22 - 30 window could give us a very good buying opportunity as it would likely be the start of a new medium-term AND a 50 week cycle. Stay tuned for updates.
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