A Complex and Evolving Top
This has been a complex, evolving top that has spanned several months in its formation. Tops in the stock market tend to be rounding evolutions; bottoms tend to be spike-type events. The geometry of the evolving top in this stock market has been on-going since early July. Whether the final high for the Dow and S&P can be labeled as “complete” is yet to be confirmed. I can make the case that the highs are in – today’s wide day range, closing near the highs notwithstanding. Last weekend, I made the case for the possible high occurring in the December 10-12 time frame based on the 98.4 TD count from the July 24, 2014 high and the similarities in the pattern as compared to the 2007 top.
It’s conceivable that the scenario I conjectured may well pan out in the next 1-3 trading days. It’s also conceivable we may see only the NASDAQ Composite push to a new recovery high and the DJIA, DJTA, and S&P 500 fail to push to a new high as well. I recall from 2007 the NAZ’s high occurred 14 trading days after the Dow / S&P. Perhaps a similar evolution will occur here. Regardless, I think it would be of extraordinarily high risk to maintain any long positions here; quite the contrary, I remain resolute in my view that a major top is unfolding right in here and a few more days’ patience will prove the validity of that.
Each month, Stan Harley publishes The Harley Market Letter, a newsletter that provides advanced technical analysis of stocks, bonds, and precious metals. This is the latest update to the Harley Market Letter for December. Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter.