Our research now shows thanks to last weeks strong record closing performance the DJIA has now officially entered breakout territory above the previous month long tight trading range between 16900 and 17175 . Until this past week the DJIA had lagged the broader market S&P 500 which had a breakout into record territory over three weeks ago. As we move closer to November with both averages continuing to hold above there respective 50 moving averages, the probability of any short term sharp retest of the lower 200 day moving averages becomes less and less likely. Instead a recipe for strength through the end of September should continue uninterrupted with window dressing, triple witching and the end of the fiscal quarter coming to a close. With that said at the end of September the possibility of a retest of the 200 day moving average continues to remain a threat until the end of October. Once officially through the month of October we see a very strong year end rally for the remainder of 2014 and into early or mid 2015.
This final breakout move into 2015 will then set up a 20%+ correction that will commence and not end until sometime in early to mid 2016. As stated in last weeks broader market update blog this will mark the final year of a 17 year consolidation phase that started in 1999 for the DJIA. This will also mark more broadly the end of a third such consolidation phase for the DJIA over it’s roughly 128 year history. This broadest historical perspective for us plays a critical role in determining and simplifying what the broader markets will do over the next 20 years.
This coming week we’ll continue to broaden our strategy beyond 3 to 10 day short term stocks and offer many additional alerts to hold into the end of the year. Although we remain positive we’ll be on the lookout for any possible weakness or sudden change of direction in the broader markets.
Starting in October we’ll start to put together three different lists of Small cap, Mid cap and Large cap January effect stocks. If done right this is always a very profitable exciting way to start a new year. Check our Tradereversal website front page for details and updates and our final list of stocks in late December.
For more of our forecasting and market calls please review our previous broader market research updates and Chat commentary timelines via our Tradereversal APP and or within our blog section at Tradereversal.com
Have a great week.