The market started a baby downtrend channel last week. The top of the channel will open on Monday at 3572. Here in the premarket around 5:30 AM in New York, that trendline was being challenged as, once again, Asia and Europe have rallied. This report shows you what to look for this week as it affects the longer term outlook.
Yes, they are. They have come back to celebrate the holiday.
Jay Powell’s first order of business is to keep the bond market from breaking down. When the 10 year yield hit 0.975 last week before backing off, the market was at the edge of the abyss. Leveraged dealer bond portfolios were on the brink of disaster.
It won’t be safe to trade until the market gets through certain levels, one way or the other.
Nice little pullback yesterday. But 3540 and 3520 on the ES are both important support levels. We should see a bounce from one of those. And if not there, then major support at 3510. I wouldn’t get too excited about this pullback unless they take that …
Dare we dream? Two straight down days? Nah.
The good news is that the 9-12 month cycle projection no longer points toward 1700. The outlook will remain bullish if certain things happen this week and next.
In this Part 2 of the report, I cover the remaining interesting and important indicators that comprise the CLI. Each has its own story to tell, but they all lead to the same conclusion. Still bullish, and, unbelievably, one key component says that the stock market is oversold.
I find it difficult to wrap my head around that. But I won’t argue with it. If there’s one thing I’ve learned in 53 years of watching markets virtually every day, it’s not to argue with impartial indicators. They don’t care what I think should happen. They just show what is happening.
Well, doesn’t this look head and shouldery?
Cyclically, there’s no reason to get bearish here. Cycles of up to 6 months duration remain in gear to the upside. A 4 week cycle high is due now, but it won’t matter if the 6-8 week cycle is dominant. Here are the price targets and theoretical timing of these expected moves.