Short-Term Top Imminent

Current Position of the Market

  • SPX Long-term trend: There is some good evidence that we are still in the bull market which started in 2009, which could continue into the first quarter of 2021 before coming to an end. 
  • SPX Intermediate trend: May continue until SPX reaches 4150 in February.

SPX Short-term Top Imminent

  • Cycles: Looking ahead. 90-year cycle – last low: 1932. Next low: 2022.
  • Seven-year cycle – last low: 2016. Next low: 2023.
  • Short-term low: Jan. 18, 2021 - Jan. 20, 2021.

Market Analysis - SPX-IWM Weekly Charts

Last week, IWM accurately warned of a correction in SPX, but it was short-lived and not of intermediate nature. The next significant warning from IWM, whereby it exhibits relative weakness to SPX, may not come until we approach 4150.  

SPX Daily Chart

What a stock market. A pandemic out of control: New all-time highs. A mob attack on Washington: New all-time highs. A negative jobs report: New all-time highs. Go figure. But the market behavior is not exactly out of context when one looks to technical analysis and Point & Figure targets for answers.

My projection for a top when SPX reached 3777 was spot-on, but ephemeral. After touching 3776.99, the index back-tracked over a hundred points in the space of three hours and that was it; going on to make new highs two days later. I estimate that the next top is going to come at ~3850, possibly by Monday, Jan. 11.

This should be followed by a retracement into Jan. 18-Jan. 20 due to the bottoming of a 20-day cycle, which has had a very good record of consistency. There could be some additional consolidation into the end of the month before the market marches on to the more important top of 4150. And as long as we are making projections, we probably should not expect the bull market to end at least until April, with the SPX going to about 4450 and perhaps to as high as 4810.

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Charts courtesy of QCharts.

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