Updated Every Saturday by 8pm PST
Weekly Stock Market Update & Forecast: August 17th, 2024
A positive week with the Dow Jones up 1,162 points (+2.94%) and the Nasdaq up 886 points (+5.29%)
***Quick Note: Quite a few of our fast movers are approaching their target areas. Further, on weekly updates, we now have Soybean Futures (ZL) hitting into their target area and Natural Gas might be getting ready to finally run.
Let’s very quickly review our current stock market forecast.
Longer-Term: No changes. We remain in a waiting pattern with our 80/20% probabilities being firmly in place at this time. I am re-posting that analysis and associated points below.
Short-Term: Our original forecast indicated the Dow would decline to 38,500 by August 23rd. The index did hit that exact juncture, but on August 5th. And while this was a direct PRICE hit, this point was not supported by a TIME turning point. We assumed, at the time, the market would come back into this point or lower (37,000) by the time August 23rd TIME turning point rolls around.
This was our working forecast until the market pushed above certain levels earlier this week. Today’s short-term composition can be interpreted in one of three ways.
- No changes to our original forecast. The market will develop as originally projected over the next two weeks.
- We did hit the bottom on August 5th and are now bouncing into our projected all time highs scheduled for October.
- Our original short-term forecast is still playing out, but we are dealing with TIME extension here. With August 23rd TIME juncture most likely ushering in a completion point for this bounce. Then a decline into early September followed by that final rally.
Our short-term calculations tend to suggest a good point of force arriving on Wednesday/Thursday of next week. This also lines up with our August 23rd TIME turning point. In other words, if our original short-term forecast is to play out, there is a very high probability the market will roll over mid next week to follow through on the next stage of the decline.
These short-term oscillations are a bit messy, but let’s give the market a few more days to clear things up. The impact on our long-term forecast is non existent here.
Speaking of, our market topping saga continues. And the biggest question we have to answer this week, once again, is whether or not we have seen THE top.
As we have been discussing throughout the week, the probability that THE top is indeed in is at about 20%, while the probability that the top is NOT in stands at 80%. Here is why….
- While the recent turn did occur at our July 19th (+/- 2 trading days) TIME turning point and while the SPX delivered a perfect hit on our adjusted PRICE target, numerous issues remain. Chief among them is the Dow pushing outside of its adjusted target range of 40,500 (+/- 500 points), resting its case at 41,376. We could argue that the Dow pushed just at the margin of what’s possible, but even our short-term calculations suggest this was not the top.
- We had 2-3 substantial gap downs on both the SPX/NDX right off of the top. Including Friday’s gap down. This suggests the indices will come back soon to hit new all time highs.
- While the SPX delivered a perfect hit, the Dow pushed at the margins and likely into its next point of force located at 42,500 +/-, the NDX/QQQ also missed their final projection. If you would recall, our calculations had NDX at 21,150 and QQQ at $515. We topped just short of that.
- Our short-term calculations on the Dow suggest July 18th was not the top.
All in all, when taken separately, each point can be explained away. Yet, as a whole, I believe, they give us that 80% probability that the top is NOT yet in.
And if so, where is the top?
The next juncture of interest arrives in mid October at around 42,500 +/- on the Dow. As we have discussed throughout the week, this most recent sell-off is sufficient enough to issue a short-term downside target. Our preliminary calculations suggest the bottom will occur around August 23rd with 38,500 being the most likely target. Then a run up to the final top in October.
This is the scenario with 80% probability associated with it.
With all of the above in mind, we cannot yet dismiss the fact that we might have seen the top two weeks ago. This probability remains at 20%. After all, it was a very good TIMING hit and the indices did either hit at their exact targets or came very close (within the margin of error).
As a result, we must pay very close attention to the market here. If we begin to gather technical evidence (nothing as of now) that the top is in, our probabilities will shift.
At this point we have to let the market develop over the next few weeks. 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 ————–