Weekly Stock Market Update & Forecast, May 19th, 2024

Updated Every Saturday by 8pm PST

Weekly Stock Market Update & Forecast: May 18th, 2024

A positive week with the Dow Jones up 491 points (+1.24%) and the Nasdaq up 345 points (+2.11%)

Let’s first 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.

- - 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)

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.

This week all indices resolved their 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 are now sitting on top of a powerful May 17th (+/- 2 trading days) TIME turning point that should mark a top of this bounce.

So, what are we to make of all of the above?

Recent new all time highs on some of the indices complicate the technical picture a little bit, but not our Time/Price calculations or TIMING metrics. For the time being all indices remain at their targets and well within their respective margins of error. For the time being we have to assume this is a simple short-term double top formation.

Further, Thursday’s high makes sense in terms of being the top of this bounce. If the market begins a structurally sound sell-off over the next few trading days, we would begin to get confirmation that the top of this bounce is indeed in. And once that happens we simply revert back to our original forecast.

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————-

Weekly Stock Market Update & Forecast: May 11th, 2024

Another positive week with the Dow Jones up 837 points (+2.16%) and the Nasdaq up 184 points (+1.13%)

This is exactly why we were not happy with the gap downs the market has left behind in early April. Typically, particularly for gap downs, the market comes back to close them before a more structural move down can begin. This is particularly true when the market is shifting gears from bull to bear.

As of today, most gaps have been closed. The only gap that remains is on the NDX. By now this particular gap is very small and the NDX itself is secondary, but let’s for a second assume that this gap will be closed before the market rolls over and continues on with our projected bear market.

Further, as we have been suggesting, May 17th (+/- 2 trading days) TIME turning point is a very strong and seasonal TIME juncture. So much so that we expect this bounce top to arrive at this TIME juncture. In other words, we expect this bounce to terminate as soon as next week.

One last thing to mention. The indices can put in slightly higher highs if they so choose. If you would recall, prior tops in late March and on April 1st were direct “perfect” hits. As is indicated below. Slightly higher highs now would definitely remain within the margin of error for the same junctures. It would definitely complicate the technical picture, but it would not change our math at this time.

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.

- - 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)

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).

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.

End Of Update————-