• 2 hours Why Investors Shouldn't Ignore Gold Stocks
  • 20 hours Facebook Scrubs Over 2 Billion Fake Accounts
  • 1 day Dow Scrambles To Avoid Fifth Straight Weekly Loss
  • 2 days Is This The World’s First Truly Democratic Stock Exchange?
  • 2 days India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 2 days First Quarter Profits Slip For World's Top Oil Companies
  • 2 days The Yuan May Be China's Biggest Weakness
  • 3 days Hedge Funds Having A Banner Year
  • 3 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 3 days BHP Turns Bullish On EVs
  • 3 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 4 days The $90M Inflatable Rabbit Redefining Modern Art
  • 4 days Huawei’s Fate In The Air
  • 4 days Tesla Slashes Prices Again
  • 4 days The Modern History Of Financial Entropy
  • 5 days Italy’s Central Bank Embraces Sustainable Investing
  • 5 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 5 days Researchers Push To Limit Space Mining
  • 5 days Could China Start Dumping U.S. Treasury Bonds?
  • 6 days Is Winter Coming For HBO?
Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

  1. Home
  2. Markets
  3. Other

The Stock Market's Worst Yearly First Week Ever!

The warning signs were there, back in December, several of our critical and proprietary stock market forecast indicators warned a significant and perhaps unprecedented decline was fast approaching.

The Worst stock market decline at the start of a new year in the history of the U.S. stock market completed with another big down day Friday, January 8th, with a big sell off into the close. Since our Demand Power / Supply Pressure Indicator forecast the start of the next significant decline, on December 31st, the Industrials have lost 1,110 points. Since our amazing trend-finder Purchasing Power Indicator triggered a Sell on Monday, January 4th, the Industrials have plunged 834 points.

Okay, this decline is starting to get serious. Next major support is the August 2015 lows. If stock prices break down below those levels, we can conclude a worldwide economic avalanche has started, Grand Supercycle Degree {IV} down, the next Great Recession / Depression. The NYSE is 5 points from breaking below its August lows, while the Trannies and small cap Russell 2000 have already broken those August lows. The major indices are likely to follow. The rally from August was three large waves, not five, and was corrective inside a developing mega-Bear market.

Purchasing Power Indicator
Our Purchasing Power Indicator
(The Short-term Market Trend, typically from 1 to 4 weeks)

Our Purchasing Power Indicator generated a new Sell Signal Monday, January 4th. It remains on a Sell Wednesday, January 6th. Since the PPI triggered a Sell signal on January 4th, the Industrials have plunged 864 points! The PPI remains on a Sell signal this weekend.

Our Demand Power / Supply Pressure Indicator
Our Demand Power / Supply Pressure Indicator
(The Short/Medium-term Time Horizon Trend,
Typically from 1 to 3 Months)

Since the DP/SP Indicator triggered a Sell on December 31st, the S&P 500 has dropped 105 points. Since this Sell Signal, the Industrials have plunged 1,110 points.

As of this weekend there is no early sign from this indicator of a bottom. To see such an early warning, we would want to see convergence between the Demand Power and Supply Pressure Indicators, which so far has not occurred. Or, we would want to see a Bullish divergence between prices and Demand Power where Prices are falling and Demand Power is rising. Not there yet.

Thus we conclude from this indicator that conditions remain ripe for more downside to this trend from January 1st, 2016.

y Trend Indicator
Our Secondary Trend Indicator
(The Intermediate-term Time Horizon Market Trend,
Typically from 3 to 12 Months)

Our Secondary Trend Indicator remains on a Sell Signal from July 22nd, 2015. Since that Sell Signal, the Industrials are down 1,505 points as of January 8th, 2016!

Take note that a huge Bearish Divergence was occurring between our Secondary Trend Indicator (was declining) and stock prices (were rising) during the last three months of 2015, which was warning in flashing neon lights that a significant stock market decline was approaching. Further, notice that because this divergence was huge, it was telling us the approaching decline would be significant. Well, it has been, as U.S. stocks have seen their worst first week of a year ever!

S&P500 versus Moving Averages
Our S&P 500 versus
10 Day Average Advance / Decline Line Indicator
(Identifying Bullish and Bearish Divergences
for early detection of future trend turns)

Stocks plunged in tumultuous fashion the first week of January, as predicted by a massive Bearish divergence between stock prices and the 10 day average Advance/Decline Line Indicator.

What is missing is any evidence of a Bullish divergence this weekend, so it is quite likely stocks have further to drop.

NASDAQ 100 versus Demand Power and Supply
Our NASDAQ 100 Demand Power / Supply Pressure Indicator
(Identifying Medium term Buy and Sell Signals and also
Bullish and Bearish Divergences
for early detection of future trend turns)

Our NASDAQ 100 Demand Power / Supply Pressure Indicator generated a Sell signal on December 31st, sniffing out the stock market plunge we saw this past week. Since this Sell signal, the NDX has dropped 328 points! This Sell signal occurred when our Supply Pressure measure rose 10 points above our Demand Power measure.

Further, above we see that this indicator was warning that a significant decline was approaching, in that there was a huge Bearish Divergence between Demand Power and NASDAQ 100 prices over the last three months of 2015. This has proved to be accurate.

However this weekend, there is no indication of a bottom to this declining trend. We would want to see convergence between Demand Power and Supply Pressure measures, which is not the case this weekend. Also, there is no evidence of a Bullish divergence between Demand Power and prices. This suggests the odds remain high that more downside is coming before a bottom arrives.

NASDAQ 100 versus 10 Day Average Advance / Decline Line Indicator
Our NASDAQ 100 versus
10 Day Average Advance / Decline Line Indicator
(Identifying Bullish and Bearish Divergences
for early detection of future trend turns)

Our NASDAQ 100 10 day Average Advance / Decline Line Indicator identified a growing Bearish Divergence from October through December 2015 which was warning that a significant decline was coming to tech stocks. That is exactly what has occurred here in the first week of 2016.

Russell 2000 versus 10 Day Average Advance / Decline Line Indicator
Our Russell 2000 versus
10 Day Average Advance / Decline Line Indicator
(Identifying Bullish and Bearish Divergences
for early detection of future trend turns)

Small caps plunged the first week of January 2016 after a Bearish Divergence occurred between the Russell 2000 and its 10 day average Advance/Decline Line Indicator.

So as the above charts show, the stock market gave us plenty of warning about what is occurring now in 2016. The above indicators gave us precision as to the timing of when the next major decline would begin, especially our short-term Purchasing Power Indicator and Demand Power / Supply Pressure Indicator. However, what has really been warning us about the future for the stock market is the multi-decade Jaws of Death pattern, the largest such pattern in over a century, an ominous warning:

Dow megaphone Pattern

This pattern didn't go anywhere, it is still staring us in the face. The rally this autumn did nothing to change the above ominous Bear Pattern. This multi-decade Jaws of Death pattern has not been erased, compromised, or changed.

A massive economic decline and stock market plunge is in its infancy.

We are now on HIGH ALERT!!!!! Grand Supercycle degree wave {IV}'s decline is close at hand. The Industrials are about to plunge from the upper boundary of the Jaws of Death pattern, the top for Grand Supercycle degree wave {III} up. Grand Supercycle degree wave {IV} down, which could last 5 to 7 years, is now underway.

 


Get a FREE 30 Day Trial Subscription to receive our Daily and Weekend U.S. and International Market Forecast Reports at www.technicalindicatorindex.com Simply click on the button at the upper right of the home page. We cover stock markets and Gold daily and have Buy / Sell signals. We also offer a Platinum Trading service. Email us at mainrdmch@aol.com for information on that program.

When did Noah build the ark? Before it rained. Well, it is starting to rain. We believe it is now time to make sure our arks are built and can float. We can help you at www.technicalindicatorindex.com with our daily and weekend market updates, or conservative portfolio model, and Platinum educational Trading program.

Do not be satisfied hearing what the market did; learn how to predict what the market is going to do. Join us at www.technicalindicatorindex.com as we study the language of the markets. Markets tell where they are headed. Technical Analysis is the science where we learn and apply the forecasting language of the markets.

Dr. McHugh's book, "The Coming Economic Ice Age, Five Steps to Survive and Prosper," is available at amazon.com at http://tinyurl.com/lypv47v

"Jesus said to them, "I am the bread of life; he who comes to Me
shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
For this is the will of My Father, that everyone who beholds
the Son and believes in Him, may have eternal life;
and I Myself will raise him up on the last day."

John 6: 35, 38, 40

 

Back to homepage

Leave a comment

Leave a comment