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Technical Analysis

US Stock Markets - Seasonal/Cyclical Correction Nearby

by Antonis Benis, on Nov 12, 2020 4:19:22 PM

Markets tend to turn bullish around elections, last Monday’s - news related - blowoff top,  must have marked the high for the rally that started from the October 30th low.


Dow Jones

Dow Jones 30 registered a sell countdown 13 on November 9th, the sequential sell setup is on 8 today; will be perfected with a close above 29319 (Dec. futures), as early as tomorrow (see chart 1)

DOW 30 Daily Trading Signals

Russell 2000 needs a close above 1734 to also register a sequential sell setup 9. Nasdaq 100 has exhibited a bearish price flip, the high is in place, possible double top.

NYSE Advance/Decline line has made a new high, confirming the recent highs, no divergence there. High yield bond Advance/Decline line has also made a new high, strongly suggesting that liquidity is not an issue in the near future.

Valuations at very high levels, last seen at the top in 2000.


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Seasonality

Seasonality is positive from November through April. Presidential election pattern shows a dip from around now into late November/early December followed by resumption of the rally (see chart 2)

Seasonax trading signalsCourtesy of Seasonax


Cyclical

Cycles (daily, short term) suggest a correction that should start around now and should bottom on November 20th and/or December 4th. (see chart 3). The decline shown from mid-December until the middle of January could be a false one, like it was last August (cycle reversal).

S&P short term trading signals

Weekly, long term cycles suggest a decline around now followed by a rally into May 2021 (see chart 4)

DOW JONES  weekly trading signals


Gann analysis

Dow Jones: major resistance at 30142/30250, it is much higher than current levels (29111 at the time of writing this report); I don’t think it can be reached (see chart 5).

DOW JONES daily - GANN Analysis

S&P 500: major resistance at 3587/3620, reached in September and again last Monday but failed to close above it (see chart 6). Next major resistance at 3970, if/whenever the recent highs are exceeded.

S&P weekly - GANN Analysis

Nasdaq 100: major resistance at 12413, reached in September and retested last Monday; is the weakest since September (see chart 7).

Nasdaq 100 weekly - GANN Analysis


Conclusion

Expect a short term pullback/correction into November 20th and/or December 4th (higher low?). From there, expect a rally into Christmas and possibly major top in April/May 2021.

Investors are advised to wait for better prices in the next 1-2weeks; traders could take sell signals against last Monday’s highs as early as tomorrow.


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Topic:Trading SignalsActive TradingS&P 500Dow JonesUS Stock MarketNYSECovid-19Stock Trading
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