So far we are on the low road. I selected a leading index on the move up and found the Dow Transports which made new 52-week highs before any other major index. This index quickly reversed after two days. So my view of the general market went with it. The transports are now far below the 200-day moving average. The fact that the leading stocks became late stage colored my view of the future. Leading stocks topping is an indication of a tired bull market. I have mentioned many times that the upward stair-stepping NASDAQ average true range since the beginning of the year was the signature of a late stage bull market. I think we arrived at the top on July 7 and that we are now in a new bear market. There is little doubt that we can have a fall bear market rally into the end of the year starting late this month or any time later. This would be characteristic.
Today's move up was good but expected.
I ran a Point and Figure price target on the current topping consolidation on the NASDAQ.
My initial target is 2250 based on a horizontal count. I have another target at 2100 based on a vertical count. I can explain these techniques for those interested.
and if we go down quickly here a third target at 1950.
If you are not a student of point and figure charting, it is a very old technical charting technique that will quite accurately predict stock or market moves over long time frames. Only the 2250 target is activated. The other lower levels could become activated as time proceeds.
