Consolidation In The Dow Jones Or The Makings Of A Major Top?

Current Position of the Market

SPX Long-term trend:  There is some evidence that we are still in the bull market which started in 2009 and which could continue until major cycles take over, and it ends.  The 4550 projection which had been in effect since the March 2020 low has now been reached, but there is still no sign of a major top.

SPX Intermediate trend:  A Short-term SPX correction is underway.

Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.

Cycles:  Looking ahead! 

7-yr cycle – Last lows: 2009-2016.  Next low:  ~2023

Market Analysis (Charts, courtesy of StockCharts) 

New York, Stock Exchange, Money

Pixabay

DJA daily

Here is another perspective on the market:  while the SPX and NDX have continued to make new highs, the Dow Jones complex (industrials, Transports, utilities) has been going sideways since May. Is it simply consolidating at the intermediate level, or making a major top?  This is not a question that can be answered at this time, but if this index makes a new low, we may have our answer (DIA, NDX).   

The individual components are charted separately below.  The transportation index, which has been severely affected by the pandemic has been the weak sister, but the other two may be showing an inclination to follow it.  The TRAN is already making new lows, a response to a resurgence of virus infections, while the UTIL is becoming concerned with a possible recurrence of inflation.  The latter is also affecting the INDU.

SPX daily chart

In the previous report I mentioned that the short-term cycle – probably an expression of the Hurst 80-day cycle – which had been beating visibly and regularly on the daily SPX chart was likely to have its weakest showing since May.  This was confirmed last week since it has already made the more complex correction from that date and probably has a couple more days to go which, according to the SPX P&F chart, could extend the decline down to ~4380.

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The above comments, as well as those made in the daily updates and the Market Summary about the financial markets, are based purely on what I consider to be sound technical analysis principles. ...

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