5/8/2024 – A mixed day with the Dow Jones up 172 points (+0.44%) and the Nasdaq down 29 points (-0.18%)
As we have been suggesting for some time, the Dow continues to slowly grind higher towards it’s gap closure. We are now about 500 Dow points away. About the same in % terms on the NDX and the SPX has completed its gap closure. Once all of these structural issues are resolved, we anticipate the sell-off to resume.
Thus far, the market has delivered a perfect hit on our long-term top time/price projection.
Over the past few weeks we have been discussing numerous structural divergences the market has left behind. Notably, numerous gap downs the market has left behind. Our premise has been rather simple. Before a more prominent move down can initiate, the market will most likely close these gaps.
Out of all the indices, the furthest unfilled gap we have is on the Dow. Located at around 39,550. It’s not a particularly big one and can be essentially dismissed if the Dow rolls over and begins to breakdown. The NDX is not that far behind. Plus, the market has completed a perfect A-B-C corrective pattern off of its recent bottom. May 17th (+/- 2 trading days) is typically a powerful seasonal TIME turning point.
All in all, short-term, we should anticipate the market to begin its next phase of our projected decline very soon.
Otherwise, no other changes from prior updates. 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————-