For Traders, This is a Market about Nothing

07/05/2017 7:22 pm EST

Focus: STRATEGIES

Jeff Greenblatt

Director, Lucas Wave International, LLC

The stock market? It may very well drift along until certain promises will be realized or not, asserts Jeff Greenblatt, director of Lucas Wave International and editor of The Fibonacci Forecaster.

Last week the market hit a small degree 161-day window off the early November low that created a leg up called the Trump rally. Cycle analysts know it’s possible to invert that cycle and it can create a low instead of a high if it peaks a couple of days early.

The NASDAQ-100 Index (NDX) hit a secondary high for this window on June 26. By Thursday it made a new low for this sequence and did it again on Monday. By contrast, on Friday the Dow didn’t confirm and hit a new all-time high on Monday (July 3). Any Seinfeld fans out there? This truly is a market about nothing.

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Taking it one step further, the Transports also hit a new high on Monday, pleasing the Dow theorists with a Dow theory confirmation buy signal. So how is it the market can hit new highs and lows at the same time in this sequence? It certainly doesn’t happen very often. Then again, Monday was a holiday light volume half session. How much weight are we to put into it? If intention means anything, a lot. When the market wants to go down, it will go down.

On Wednesday, the Dow started lower in the first hour and spent the rest of the day either recovering or going sideways. Right here, the market doesn’t want to stay down.

In an earlier post, we established Europe may have peaked. There is a golden spiral calculation on the CAC dating back to 2009 and it has been lower for the better part of the last two months. Since US markets are only getting back in full swing, it is a confusing week but in the very least the CAC has held its ground.

What does all of this mean? For bulls, we have technology and the Transports diametrically opposed to each other. We have a new buy signal which may be confirmed by the Dow but it’s not confirmed by tech. Usually, this kind of divergence is a signal the market is in transition to something else. Bigger cycle points do not mature until the end of August in the very least.

The market remains vulnerable. As you know there is the ongoing saga of Congress and the health care bill. Last week, they didn’t come together on an agreement before the holiday. The challenge is whether an agreement will be reached.

Congress has put a promise in the mail and the market checks the box every day to see if it has been delivered. How many days go by before the market catches on no agreement is coming? Over the weekend, even the president admonished Congressional leaders to repeal if they can’t agree on replace. The most important notice out of Congress right here might be whether they intend to cancel the August recess and really get it done.

Finally, oil has been on an incredible run since the 377-day cycle low on the seasonal change point. By Wednesday it ran out of gas and sold sharply. It did as well as it possibly could for an initial leg off the bottom, coming all the way to the larger last thrust down. It has a small vibration at 204 hours with a low of 42.05 (the 204/05 is the vibration). The highest probability to see if the bottom is confirmed is whether the short squeeze sequence near 44.36 holds.

The stock market? It may very well drift along until certain promises will be realized or not.

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