5/16/2024 – A negative day with the Dow Jones down 38 points (-0.10%) and the Nasdaq down 44 points (-0.44%)
It is quite possible we have seen the top of this bounce today. Once again, all requirements have been satisfied and we are now sitting on top of an important May 17th TIME turning point. We have a bit of a messy technical picture at the time where we have seen all time highs on some indices, but not others. For instance, while we saw an all time high on the Dow’s cash index, the Dow futures are yet to push above April’s high.
In other words, our work continues to show the market will terminate its bounce now as it reverses into its next structural leg down. These new highs on some of the indices complicate our technical pictures somewhat, but we can discuss it once the market begins to breakdown again.
I am leaving the rest of our analysis the same for the time being and will make slight adjustment once this double top is confirmed.
Let’s recap our current setup……..
For months, and in the case of the Dow Jones, for 18 months, we have maintained the following price targets.
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- SPX: March 25th (+/- 2 trading days), PRICE Target 5,200 (+/- 100 points).
- Dow: March 25th (+/- 2 trading days), PRICE Target 40,000 (+/- 500 points)
- NDX: March 25th (+/- 2 trading days), PRICE Target 18,300 (+/- 200 points)
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Over the past few weeks we have been discussing the fact that while the long-term calculations completed in late March (ex. March 21st on the NDX), short-term calculations at the time indicated the market would complete around April 1st.
On March 30th we issued the following short-term update (see last week’s update).
We believe we might see the final top on the Dow Jones in the first 60 minutes of trading on Monday (April 1st). Please check our Intraday update on Monday as we might reverse position from long to short at that juncture.
Once the market opened that Monday, it proceeded to sell-off nearly immediately. The Dow missed an all time high by a few points, while the SPX did so by a fraction of a point. Yet, as was discussed previously, the Dow Futures did hit an all time high in the pre-market. All in all, the hit was not perfect, but sufficient enough to suggest the top was indeed in.
As a result, we liquidated our prior long-term and short-term 100% long positions at the time (15 minutes after opening) and went short 50% (long/short term) at 39,700 and equivalent on the Dow.
We then discussed various short-term divergences and suggested that we would take the other 50% short position when the market gives us a technical confirmation. As was discussed throughout the week, this confirmation arrived on Thursday and we were triggered into the rest of our short position at 38,950.
As a result, both our short-term and long-term portfolios are now 100% short at an average entry point of 39,325. Our stop loss is at 40,500.
In summary, thus far, we have had a perfect hit on the top projection we have been discussing for a very long time. In case of the Dow since October of 2022 bottom. We will now wait for further confirmations that the top is in. And once we do get them, we will begin discussing downside projections.
Yet, as we have been saying for just as long…..once the said top is put in place, the market should shift its gears into a severe bear. We need to re-calculate our bottom projections again, but if I recall correctly, a re-test of 2020 bottom is probable. We can wait for this until the market confirms the top.
End Of Update————-