The S&P 500 ($INX) extended its a major (long-term) uptrend to a high of 5,878.46 before closing at 5,705.45, down 57.03 for the month. This completed a bearish spike reversal, confirming a move to a new major downtrend. Theoretical Positions: Previous long positions from the October 2022 close of 3,871.98 would be sold and new short positions established near the October 2024 close. Buy stops would be placed above the October high of 5,878.46. Sell stops would be placed below the previous 4-month low of 5,119.26 to establish additional short positions. The 20% retracement level (classic bear market definition) is down at 4,702.77.
The Dow Jones Industrial Average ($DOWI) extended its major uptrend to a high of 43,325.09 before closing at 41,763.46, down 566.69 for the month. This completed a bearish spike reversal, confirming a move to a new major downtrend. Theoretical Positions: Previous long positions from the October 2022 close of 32,732.95 would be sold and new short positions established near the October 2024 close. Buy stops would be placed above the October high of 43,325.09. Sell stops would be placed below the previous 4-month low of 38,499.27 to establish additional short positions. The 20% retracement level (classic bear market definition) is down at 34,660.07.
The Nasdaq ($NASX) still looks to be in a major downtrend based on the completion of a bearish spike reversal during July 2024. While the Nasdaq spiked to a new high of 18,785.49 during October, it still closed lower for the month. Technically this left the major downtrend in place. Theoretical Positions: Longs from the October 2022 close of 10,988.15 would have been liquidated near the July close of 17,599.40, locking in a gain of roughly 6,611. Additional short positions could be established near the October close of 18,095.15, with buy stops above the October high.
The US 10-year T-note (ZN) remains in a major uptrend with the April Wave 2 low of 107-040 a test of the downside target of 107-016. The latter is the 78.6% retracement level of the Wave 1 rally from 105-105 (October 2023) through the high of 113-120 (December 2023). Wave 3 was confirmed by the August move beyond the Wave 1 peak, The initial major upside target is 118-273, the 38.2% retracement level of the previous major downtrend. A Wave 5 rally would be confirmed with a move beyond the Wave 3 high of 115-070 (September 2024). Theoretical Positions: New longs might’ve been established near the November 2023 close of 109-150. Additional positions could’ve been established near the April close of 107-140. Another round of long positions could’ve been put in place during August as the ZN took out its Wave 1 high. This would put the average long position near 110-000.
