Another False Positive, or a Market High?

Stan Harley |

Major High Imminent

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Admittedly guilty of heralding a number of prior false-positives, I nevertheless contend that we are on the cusp of a significant stock market high. Whether this pending high I am calling for turns out to be the pinnacle high in this mother-of-all bull markets remains to be seen. Stock market highs tend to be rounded affairs. That is, all of the major benchmark averages do not – as a rule – top-out in unison. What we tend to see is a broadening affair with a number of components among the Big FIVE as I like to call them peaking-out across a broad swathe of time. Thus far we have seen the all-but-certain high in the Dow Transports – a major bellwether among the Big FIVE. 

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That index peaked-out on November 28th of last year and has been trending southward ever since. We have the Dow Industrials slightly above the 18,125 level, the S&P 500 hovering over the 2,125 line, and the New York Composite just a smidge under the 11,125 line marker. All of these price levels are major price ocatves and, as such, signify major levels of resistance. Perhaps that seals the deal with only the NAZ pushing to new highs and, in the process, eking out a double top with the March 10, 2000 high. Regardless, I would not be long here.

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Treasury Bonds / Yield

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Since peaking-out nearly two months ago, bond prices have cascaded southbound and are attempting to find support in the region of last January’s highs. Despite the prospect for some type of oversold bounce, I don’t see the ingredients for any meaningful low in here. A pop back to the 20-day moving average will likely produce further resistance and another wave of selling.

Precious Metals

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Although I find myself a bit under water with my announced return to the bearish side on May 1st, I nevertheless view any bounce in the metals complex as an opportunity to add to bearish positions. I look for a little flat-lining next week but the trend for the metals complex is decisively southbound.   

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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 April. Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter.  

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