Bear Market Rally From Christmas Lows Continues

(AP Photo/Richard Drew)

The key to the bear market rally comes from the Dow Jones Transportation Average that traded as low as 8,850.49 on January 3, holding my semiannual value level at 8,858 and then ended last week above its “reversion to the mean” at 9,108.77.

For this week each of the five U.S. equity averages have a weekly value level as the daily charts below will show.

I call the strength since Christmas as a bear market rally not a new bull market as all five averages begin 2019 with monthly, quarterly and annual risky levels, which is an indication to sell on strength. Four also have semiannual risky levels. Only the Dow Transportation Average has a semiannual value level.

My call for the bear market rally was solidified by the Russell 2000, which ended last week above its reversion to the mean at 1,354.85. Remember that I consider the reversion to the mean to be the 200-week simple moving average.

The Scorecard for December 4, 2019

Scorecard for the Major AveragesGlobal Market Consultants

Today’s charts are daily and show the key levels as horizontal lines. The lowest is the weekly value level for this week.

Courtesy of MetaStock Xenith

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The Dow Jones Industrial Average (23,433.16 on January 4) set its all-time intraday high of 26,951.81 on October 3 and is in correction territory, 13.1% below this high. The daily chart shows that the Dow has been under a “death cross” since December 19 when the 50-day simple moving average declined below its 200-day simple moving average, indicating that lower prices lie ahead. This set the stage for the move to its 2018 low of 21,712.53 set on December 26. The pop since then has been 7.9%. The chart shows my weekly value level at 22,033 with semiannual, monthly and annual risky levels at 24,340, 25,578 and 25,819, respectively.

 Courtesy of MetaStock XenithCourtesy of MetaStock Xenith

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