UPDATE ON THE BROAD STOCK MARKET (8:00 pm EDST)
Way back on September 27th I wrote:
"We are now entering a time period starting today through the first three weeks of October in which all markets could be very volatile and indecisive. Thus, we need to be especially cautious, nimble, and flexible with any trading during this period as markets may be giving us mixed signals."
Well, we are still in that time frame, and the broad stock market is still giving us mixed signals and seems indecisive in its directional trend (up or down). The cycle patterns in the DOW and S&P 500 are also unclear, but the trend seems a bit more bearish than bullish. However, the NASDAQ's trend appears to be more bullish at the moment. Let's look at each index separately.
The DOW could still be an old medium-term cycle making its final bottom (due anytime within the next 3-4 weeks). If this is the correct labeling, then this index will test or break below the Sept. 20 low of 33,613 soon. But it's also possible that the Sept. 20 low was the start of a new medium-term cycle. In that case, the DOW should not break below there and should start to rally soon to possibly challenge the all-time high of 35,631 from Aug. 16. We are now near the center of our current strong reversal zone for all markets (Oct. 8 - 25), so we should expect a significant high or low soon. The key support and resistance lines to watch are 33,613 and 35,631, respectively.
The S&P 500 is especially ambiguous in its cycle pattern right now, but it seems likely that it is an older cycle still bottoming. There is, nevertheless, the possibility that a new medium-term cycle started with the 4,279 low of Oct. 4. If that labeling is correct, this index should be bullish and about to start a significant rally. A significant break below 4,279 would negate that idea. A break above last week's high at 4,430 would support this bullish scenario. As with the DOW, we will have to wait and see which line will break to better determine the current trend.
The NASDAQ seems a little more bullish than the other two indices. There is a strong possibility that this index started a new medium-term cycle with last week's low at 14,181. If so, this index could be very bullish (last Thursday's "gap up" point jump supports this view). If the NASDAQ starts falling below 14,181, however, we will have to consider the possibility that this index began a new medium-term cycle with its low of 14,424 on Aug. 19. If that's the case, the NASDAQ's trend has turned bearish (because it has already fallen below 14,424), and it will be headed lower for many more weeks. So the line to watch here is 14,181.
Our main concern right now is whether or not the broad stock market has already made a LONG-TERM TOP and is ready to take a very significant long-term correction down. If this is the case, then the all-time highs of our three indices (35,631 on Aug. 16 for the DOW, 4,546 on Sept. 2 for the S&P 500, and 15,403 on Sept. 7 for the NASDAQ) will not be exceeded, and we should be selling this market short. But it looks like there could be one last rally into the end of this year where one, two, or possibly all three indices could make new all-time highs before starting their final long and steep descent into a long-term cycle bottom (possibly due sometime in 2023 -2024, but it could end earlier). We obviously want to be in a short position during this long-term correction - crash?
So we now wait to see if this market can muster another rally to new all-time highs. If it can't, or if one, two, but not all three of our market indices make(s) a new high (bearish divergence), then we will be looking to sell short for a very long correction down. Still on the sidelines of the broad stock market.
Way back on September 27th I wrote:
"We are now entering a time period starting today through the first three weeks of October in which all markets could be very volatile and indecisive. Thus, we need to be especially cautious, nimble, and flexible with any trading during this period as markets may be giving us mixed signals."
Well, we are still in that time frame, and the broad stock market is still giving us mixed signals and seems indecisive in its directional trend (up or down). The cycle patterns in the DOW and S&P 500 are also unclear, but the trend seems a bit more bearish than bullish. However, the NASDAQ's trend appears to be more bullish at the moment. Let's look at each index separately.
The DOW could still be an old medium-term cycle making its final bottom (due anytime within the next 3-4 weeks). If this is the correct labeling, then this index will test or break below the Sept. 20 low of 33,613 soon. But it's also possible that the Sept. 20 low was the start of a new medium-term cycle. In that case, the DOW should not break below there and should start to rally soon to possibly challenge the all-time high of 35,631 from Aug. 16. We are now near the center of our current strong reversal zone for all markets (Oct. 8 - 25), so we should expect a significant high or low soon. The key support and resistance lines to watch are 33,613 and 35,631, respectively.
The S&P 500 is especially ambiguous in its cycle pattern right now, but it seems likely that it is an older cycle still bottoming. There is, nevertheless, the possibility that a new medium-term cycle started with the 4,279 low of Oct. 4. If that labeling is correct, this index should be bullish and about to start a significant rally. A significant break below 4,279 would negate that idea. A break above last week's high at 4,430 would support this bullish scenario. As with the DOW, we will have to wait and see which line will break to better determine the current trend.
The NASDAQ seems a little more bullish than the other two indices. There is a strong possibility that this index started a new medium-term cycle with last week's low at 14,181. If so, this index could be very bullish (last Thursday's "gap up" point jump supports this view). If the NASDAQ starts falling below 14,181, however, we will have to consider the possibility that this index began a new medium-term cycle with its low of 14,424 on Aug. 19. If that's the case, the NASDAQ's trend has turned bearish (because it has already fallen below 14,424), and it will be headed lower for many more weeks. So the line to watch here is 14,181.
Our main concern right now is whether or not the broad stock market has already made a LONG-TERM TOP and is ready to take a very significant long-term correction down. If this is the case, then the all-time highs of our three indices (35,631 on Aug. 16 for the DOW, 4,546 on Sept. 2 for the S&P 500, and 15,403 on Sept. 7 for the NASDAQ) will not be exceeded, and we should be selling this market short. But it looks like there could be one last rally into the end of this year where one, two, or possibly all three indices could make new all-time highs before starting their final long and steep descent into a long-term cycle bottom (possibly due sometime in 2023 -2024, but it could end earlier). We obviously want to be in a short position during this long-term correction - crash?
So we now wait to see if this market can muster another rally to new all-time highs. If it can't, or if one, two, but not all three of our market indices make(s) a new high (bearish divergence), then we will be looking to sell short for a very long correction down. Still on the sidelines of the broad stock market.
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