Nearly time to start process of getting from long to short, for the Jaws of Death Megaphone Topping at work, and waiting for Hindenburg Omen Crash
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at www.technicalindicatorindex.com ... be the folks responsible for me having a good time back in March after I had fun taking this photo on February 29th pre-boarding flight to Cape Town ...
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Today's Market Comments:
We have updated all charts in this weekend's Newsletter, Wednesday, December 23rd. Our next report will be Monday, December 28 th .
Stocks were mixed once again Wednesday, on light pre-holiday volume. The Industrials and Small caps rose, the S&P 500 was flat, and Techs fell modestly. There were no changes to our key indicators. Our three-component Blue Chip key trend-finder indicator remains on a Neutral signal. Our NASDAQ 100 key trend-finder indicator remains on a Neutral signal.
The stock market continues to oscillate up and down in choppy modest price action, in search of a trend. This weak price action will end in early 2021. All this price action is a topping process. The stock market is concluding rising trends, and looks ready to top over the coming weeks. This should be a major top. Bullish sentiment is near all-time highs, which is a contrarian indication of a major top close at hand.
This weekend we continue to see worsening large and growing Bearish Divergences between prices for the major averages and their 10-day average Advance/Decline Line Indicators, as well as their Demand Power measures, telling us a top is approaching that will lead to a declining trend of some significance. We also see a huge Bearish divergence between our Secondary Trend Indicator and the S&P 500. Divergences have excellent correlation with coming trend turns of significance. These are pointing to a significant decline starting in early 2021 at the latest. This is an ugly development for the stock market. Another plunge event is likely in 2021.
Major negative news will accompany this soon to arrive change in trend being forecast by the patterns we are seeing in the stock market. There is danger fast approaching for stock investors. This will provide an excellent opportunity for traders.
There is a Jaws of Death Megaphone Topping pattern from 2017, that is a finishing component, completing a massive Rising Bearish Wedge pattern from 1986, which suggests that Grand Supercycle degree wave {III} is ending now. The coming plunge in 2021 would commence Grand Supercycle degree wave {IV} down. In this scenario, the 2020 March crash did not start {IV} down, but was a key tentpole in the Jaws of Death pattern, with the rally since March 2020 as the final wave (E ) up to complete Grand Supercycle degree wave {III}. We have updated charts in this weekend's report.
The other possibility is that Grand Supercycle degree wave {IV} down started with the February/March 2020 crash, as shown in the chart on page 34. In this case, stocks look to be inside wave (C ) up, which is the end of a double zig zag pattern for Cycle degree wave B-up.
Once that tops, a massive Cycle degree wave C-down should crash the stock market again. This coming wave C-down suggests some fearful news will accompany it in 2021. This is all inside Grand Supercycle degree wave {IV} down, which is a massive Bear market that we find ourselves in at this time. Inside this Bear market will be several huge overlapping waves, as we have seen so far in 2020. We annotate a possibility for the Bear market price path in chart on page 35. So far, prices are closely tracking this projection pattern.
Once this rising trend completes, possibly in early 2021, the next wave down, C-down of (A) down, will likely be another crash. But to reiterate, we would need to see a new Hindenburg Omen Crash signal for that to occur, and there is no H.O. on the clock at this time. Over the past 35 years, there have been no stock market crashes unless an H.O. was on the clock. The wave mapping warns 2021 could be unkind to stocks.
What is interesting is that regardless of which large degree wave mapping scenario is occurring, both suggest stocks will top in the coming weeks, to be followed by a massive plunge.
On Wednesday, Gold, Silver and Mining stocks rose modestly. These markets also are looking for a definitive trend, and have been oscillating aimlessly for weeks. Our HUI key trend-finder indicators remain on a Neutral signal, as the HUI Purchasing Power Indicator is on a Sell signal, at odds with the HUI 30 day Stochastic. Gold and Silver often track this indicator. There are two scenarios for the short-term path for Gold. Once Gold rises above 1,975, we will have strong evidence that a powerful new rising trend has started, with substantially greater upside potential.
Our Blue Chip key trend-finder indicators generated a Neutral signal December 10th, 2020 and remain there Wednesday, December 23rd, 2020. The Purchasing Power Indicator component triggered a Buy signal Tuesday, December 15th. The 14-day Stochastic Indicator generated a Sell on December 10th, 2020, and the 30 Day Stochastic Indicator generated a Sell on December 21st, 2020. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Our intermediate term Secondary Trend Indicator generated a Buy signal Wednesday, May 20th, and remains there Wednesday, December 23rd, up 1 point (out of a possible 9 points), to positive + 8. It will need to fall below negative - 5 for a new Sell signal.
Demand Power rose 1 to 426 on Wednesday, while Supply Pressure fell 3 to 406, telling us Wednesday's Blue Chip rise was mild. This DP/SP Indicator moved to an Enter Long Signal November 4th, and remains there Wednesday, December 23rd, 2020.
The HUI generated a key trend-finder indicator Neutral signal December 18th, as the HUI 30 Day Stochastic triggered a Buy signal December 2nd, 2020, and our HUI Purchasing Power Indicator generated a Sell on December 18th, 2020. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Exit Short signal December 17th. On Wednesday, December 23rd, Demand Power rose 3 to 391 while Supply Pressure fell 5 to 394, telling us Wednesday's HUI rise was moderate.
DJIA/SPY PPI Flat at negative -4.36, on a Buy
DJIA 30 Day Stochastic Fast 53.33 Slow 61.33 On a Sell
DJIA 14 Day Stochastic Fast 40.00 Slow 53.33 On a Sell
DJIA % Above 30 Day Average 53.33
DJIA % Above 10 Day Average 33.33
DJIA % Above 5 Day Average 26.67
Secondary Trend Indicator Rose 1 to Positive + 8, On a Buy
Demand Power Up 1 to 426, Supply Pressure Fell 3 to 406 Buy
McClellan Oscillator Rose to Negative - 41.31
McClellan Osc Summation Index + 4110.54
Plunge Protection Team Indicator + 3.23, an "OFF" signal
DJIA 10 Day Advance/Decline Indicator - 77.1 on a Buy
NYSE New Highs 280 New Lows 4
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated a Neutral signal Tuesday, December 15th, 2020, and remain there December 23rd, 2020. The NDX Purchasing Power Indicator generated a Buy on December 15th, 2020, the NDX 14 Day Stochastic triggered a Sell on December 22nd, and the 30 Day Stochastic triggered a Buy signal on November 3rd, 2020. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to an Enter Long positions signal Wednesday, November 4th and remains there December 23rd. On Wednesday, December 23rd, Demand Power was Fell 4 to 442, while Supply Pressure Rose 1 to 420, telling us Wednesday's decline was mild.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal November 5th, 2020, and needs to fall below negative - 5.0 for a new Sell. It rose to positive + 8.0 on Wednesday, December 23rd.
NDX PPI Fell 2 to 258.18, On a Buy
NDX 30 Day Stochastic Fast 71.95 Slow 74.63 On a Buy
NDX 14 Day Stochastic Fast 50.00 Slow 58.33 On a Sell
NDX 10 Day Advance/Decline Line Indicator + 8.0 On a Buy
NDX Demand Power Fell 4 to 442, Supply Pressure Rose 1 to 420 Buy
RUT PPI Rose 3 to 173.97, on a Buy
RUT 10 Day Advance/Decline Line Indicator + 96.8, On a Buy
Today's Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Neutral signal December 18th, 2020.
HUI PPI Rose 2 to 251.60 on a Sell
HUI 30 Day Stochastic Fast 70.00, Slow 50.00 on a Buy
HUI Demand Power Rose 3 to 391; Supply Pressure Fell 5 to 394 Sell
McHugh's Market Forecasting and Trading Report |
