7/22/2024 – A positive day with the Dow Jones up 128 points (+0.32%) and the Nasdaq up 280 points (+1.58%)
Today’s market action is consistent with the probabilities described in our weekly update. As of right now the market hasn’t clarified anything as we remain in the waiting pattern.
The biggest question we have to answer this week, once again, is whether or not we have seen THE top.
In short, Friday’s market action does not negate our Thursday’s end of day discussion and associated percentages.
As much as I want the top to be in and despite this top occurring at our July 19th TIME turning point, there are multitude of issues associated with this top that suggest the market is not yet done going higher (75% probability).
The Dow has pushed its long-term calculation just outside the margin of error range. Suggesting it wants to go to 42.5K. And as we have mentioned in our Intraday update on Friday, short-term work on the Dow also suggests the market didn’t hit anything of value.
When we combine all of these factors together, including substantial gap downs on the NDX/SPX, we are left with the conclusion that most likely the tops are not yet in.
Let’s review.
If we are to consider this week’s market action, we can definitely claim that July 19th (+/- 2 trading days) TIME turning point has been triggered. Last Thursday on the NDX, on Tuesday on the SPX and today on the Dow. With the SPX/NDX delivering a very accurate hit on our previously discussed adjusted targets and with the Dow stretching its margin of error range to the max.
And if so, the tops are in and we are indeed beginning our bear market now.
As much as I would like this to be the case, I have a number of issues with this conclusion. Chief among them is the fact that the Dow pushed just outside its margin of error, suggesting a higher target at a later date (October).
Can Thursday’s top work?
Sure, but I would put that probability at 25%. Just as importantly, both the SPX/NDX left behind substantial gap downs off of their tops. Suggesting the market will come back and put in slightly higher highs.
To conclude all of the above while considering every aspect of previously discussed “messy” setup…. I would put the probability of the top being in at 20-25%, while assign a probability of 75% that it is not.
At this point we have to let the market develop over the next few trading days. If the probability will begin to shift towards the top being in, we will begin looking for additional entry points on the short side. As it stands now, it might be a bit early.
No other changes to our prior weekly, daily and Intraday updates describing the complexities associated with today’s top forming setup.
In summary, the market is putting in a complex top. Now all indices are looking for their respective tops. Our new price projections for these indices suggest they are nearly there and we are now on the lookout for a structurally sound sell-off that would confirm that the top is indeed in. Once the tops are in the market will begin a severe bear move.
End of Update ————–