Summary: Continue to maintain a LONG/HOLD position.
1/22/2014 – ALERT. My additional work suggests that the DOW topped out on December 31st, 2013. I will explain further over the next few days. In the meantime this doesn’t impact our trading position. We must wait for a confirmation.
Another slow day in the market with the Dow finishing -41 points (-0.25%) while NASDAQ was up 17 points or (+0.41). This further amplifies the divergence between the indices since the start of the year and is exactly what I was talking about in my earlier updates. YTD the Dow is down -1.23% while NASDAQ is up 1.6%. While not a significant divergence it is yet another confirmation that the market is topping. Further, while the cyclical composition of the DOW might have already topped out, the cyclical composition of NASDAQ is yet to reach its point of force. As you know, the most speculative issues tend to top out last.
The bottom line is, the market is topping here. While this doesn’t impact our existing position, we must be ready to go short at the moments notice.
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Is The Market Top In?