Slowly Rolling Over
Little by little, the rollover is commencing. Just as the top took considerable time to form, the rollover process, too, is slow to take form. But my indicators that measure both price range as well as price velocity across a multitude of time frames are heading southbound. We should see a broad market decline – a June swoon – take form in the coming trading sessions.
The topping process for the “Big Five” has been spread out across six months of time: the Dow Transports peaked out on November 28, 2014; the NASDAQ (thus far) peaked out on April 27th; the Dow Industrials on May 19th; the S&P 500 on May 20th; and lastly, the New York Composite on May 21st. Although I cannot rule out one more push to marginal new highs for the NASDAQ, I am more skeptical than not that we will see further new highs for the NAZ. Regardless of whether we do or not I remain bearish on the overall market.
As the decline begins to take form in the coming days and weeks, I look for initial support for the Dow Industrials in the neighborhood of the 17,500 price octave and the lower 1 X 1 angle depicted on the chart above. For the S&P, we have the confluence of the 2,062.50 price octave and the lower 1 X 1 angle as the initial likely support zone as well. Other than causing some minor bounce, I don’t look for those support areas to hold for long. The cold winds from the north are brewing…
60 Minute Chart
On the 60 minute S&P 500 chart below, I have depicted the high points for each of the major indices. I am targeting the June 26th - July 1st time period as the zone for the initial plunk-down low. There appears to be a 295.2 hour rhythm developing here that points mid-session on June 26th. I may refine that as we proceed, but the 0.382 / 0.618 ratios separting the highs I have depicted would indicate so. My plan is to hold bearish until that point and I may – depending on market conditions – move to NEUTRAL for a short period (TBD).
Bond prices have sold off rather precipitously seeking support in the region of the January highs. We may just get a bounce here – perhaps back to the 20-day moving average. I haven’t calculated the next high-point reversal point but for now I advise holding bearish.
Gold prices are starting to slip once again. Whether we break down from here is unclear but regardless, I would advise holding the bearish outlook. The next support level below present price is at the 1,125 price octave and a break to that level is not a question of if, but when...
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