The S&P 500 ($INX) completed a bearish spike reversal during December, indicating the major (long-term) trend has turned down. Recall the $INX completed a similar pattern during October before the euphoria/hysteria tied to the 2024 US election sent the index to a new all-time high in both November and early December. However, this euphoria/hysteria seems to have faded as December came to an end. Theoretical Positions: Previous long positions from the October 2022 close of 3,871.98 would’ve been sold near the October 2024 close. Long-term investors could look at selling near the December settlement of 5,881.63 with a buy stop above the December high of 6,099.97.
The Dow Jones Industrial Average ($DOWI) also completed a bearish spike reversal during December, also indicating the major trend has turned down. Theoretical Positions: Previous long positions from the October 2022 close of 32,732.95 would’ve been sold near the October 2024 close. Long-term investors could look at selling near the December settlement of 42,544.22 with a buy stop above the December high of 45,180.32.
The Nasdaq ($NASX) extended its major uptrend to a high of 20,204.58 during December before closing at 19,310.79, up 92.62 for the month. Technically, the index did not complete a bearish reversal pattern, unless we apply the Horseshoe Proximity that tells us, “Close is close enough”. 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. It’s a tough call for long-term investors at the end of December. If new shorts are established near the December close of 19,310.79, based on the Horseshoe Proximity and bearish reversal patterns in both the S&P 500 and Dow Jones Industrial Average, then sell stops would be place above the December high of 20,204.58.
The US 10-year T-note (ZN) is not as clear a read as it has been since the completion of the bullish 2-month reversal during October and November of 2023. For now, though, I’ll continue to call the major trend up based on the definition of higher highs and higher lows, until the ZN takes out its previous monthly low of 107-040 from April 2024. The market posted a low of 108-065 during December before closing at 108-240, down 2-085 for the month. 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. Additional longs could be established near the November close, raising the overall position average to roughly 110-250. Sell stops would be below the previous low of 107-040.
