Updated Every Saturday by 8pm PST
Weekly Stock Market Update & Forecast: June 1st, 2024
A negative week with the Dow Jones down 383 points (-0.98%) and the Nasdaq down 185 points (-1.09%)
Friday’s market action is a perfect illustration of what we have been discussing throughout the week. In particular, the gap downs the market has left behind and the market’s need to close them before a structurally sound move down can continue.
Friday’s late day “bearish” monster rally resolves nearly all issues on the Dow Jones and pushes the SPX/NDX indices very close to their own resolution. We would expect to see slightly higher prints on all indices early next week to resolve remaining issues. After that, our primary long-term sell-off can resume.
That’s our short-term setup.
Let’s now review what had happened in March/April, where we are now and what we anticipate to happen next.
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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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.
We did get a direct hit on the targets above and the market began to sell-off. Yet, as we have indicated at the time, the sell-off wasn’t structurally sound. The indices left behind a number of structural gap downs that suggested at the time we would get a bounce that would close them all.
Over the past few weeks all indices resolved those respective gaps lower and most primary indices pushed to slightly higher highs. Although, the Dow Futures remain below their April 1st high trigger.
Further, we had a nearly ideal/perfect resolution on the Dow Jones when it comes to this bounce top or this short-term double top formation. We had a perfect hit on May 17th (+/- 2 trading days) TIME turning point for this bounce and while the Dow pushed slightly above April 1st top, it was basically a perfect double top formation. Actually, the Dow Futures never pushed above April 1st high.
The Nasdaq/SPX have been a bit more volatile, but their recent highs remain well within their respective margins of error.
All in all, our major top call remains very well intact. You might argue “Perfect” on the Dow Jones for the time being. Assuming the market will continue to develop as per our original forecast we should start to see a number of downside confirmations arrive over the next few weeks. Particularly on the NDX/SPX as they should begin to follow the Dow.
It would be a telling sign when the Dow breaks below April 17th low – something that we do anticipate to happen soon.
Having said that, if the market begins to push higher once again, pushing above 40,300 on the Dow, we would begin to question our original forecast. In an attempt to figure out what is actually happening and why the market is not doing what it should. Until that happens, our forecast remains fully intact.
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————-