The NYSE has topped out

In my last blog post “Bearish Summer Ahead” I expected higher closing weekly bars for the S&P 500, Dow Jones and NASDAQ. That is what we have seen, a strong and exuberant bull week with market reaching a significant price exhaustion level.

Perhaps not a difficult prediction as statistically the week into 4 of July tends to be a strong performing week for the US markets.

The SPX completed on weekly chart the sells TD countdown and TD Combo, as expected:

SPX weekly chart – July 6th 2019

As we see in the following weekly chart, also the NASDAQ has completed a TD sell countdown (bar labeled with a blue no. 13). TD Combo was completed earlier at end of April month, resulting in a consequent 4 weeks sell off.

Nasdaq Composite Index – week no. 27 2019

The DOW closed also higher for the week but still under the all time highs from October 2018. We still have a triple top formation and H&S pattern still intact, the DOW completed also a TD countdown on a 2 week chart time frame.

DJI weekly chart – July 5th 2019

What happens next?

My expectation is that with the earning season coming up, we will see a choppy, volatile market with a lower bias until end of July, after that I expect quite a sharp decline, with high probability to crash into the month of August. I was expecting a very sharp decline already from next week, but the following charts suggest that my expectation will likely be delayed till the end of July:

In order to complete the TD Combo sell on monthly chart, the DOW should close this month above 26689.4, this will give a powerful sell signal. I expect we initially trade lower, then close the month with a rally to current highs:

DJI completing TD Combo sell signal

Volatility index, VIX and TVIX are also suggesting that a strong market correction is approaching. But the ongoing TD countdowns are indicating we will probably have to wait few more days:

Monthly VIX at bar no. 12 of TD countdown
Weekly VIX chart – TD countdown reached bar no.10
TVIX weekly chart – price ready to explode upwards!
SPX daily @ TD countdown no. 11

Trade well ;o

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