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posted on 29 January 2018

Was Friday A Market Top?

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Following last Friday’s Highs, the Dow Industrials, the S&P 500, and the NASDAQs were sharply Down today, and those Highs of last Friday remain as the top readings.


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There are two interesting aspects to today’s price action, especially in the Dow and S&P:

  1. After an initial decline, prices bounced in an upside partial retracement of the decline - and were stopped and reversed there by the “lasso" effect that we see so often at the 61.8% retracement;
  2. Prices fell away hard from the top of the bounce, made a new intraday Low, and closed lower still.

It is too soon to tell whether the Dow and the S&P 500 have switched trend from Up to Down, and whether we are looking at the start of “Wave 3 Down;" but trends of several “degrees" are pawing the ground while closing in on “Wave 5 peaks" and Sentiment levels, by several standards of measurement, are at extremes - one or more of which are setting all-time records. These are highly bearish signals.

It would take just the slightest nudge to push the Dow Industrials and the S&P 500 over the line into Downtrend mode. That nudge may have occurred today. If not,the nudge is in the neighborhood.

Some observers are perplexed that investors and advisers give “full-bore bullish" answers when asked whether they are bullish about the market or, on the other hand, whether they are bearish - and at the same time are quoted as being worried that the bull market may be coming to an end. I see no conflict: people will sometimes give a different answer to the same question, or to one similar to it, depending upon the phrasing of the question, who is doing the asking, and the purpose of the answer.


For the bull rider success is defined in seconds. How long for you?

Regardless of the immediate direction of the stock market, it is at or very near a top; and, if you intend to protect yourself, you must either be out of the market entirely or be hedging the stocks which you allow to remain in your portfolio.

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