Editor's Note: The following analysis was offered this morning via Scott Reamer's technical service. We share this vibe on the 'Ville with educational intentions only. For more information regarding Scott's unique approach, please click here.
For the Dow, SPX, NYSE index and OEX, the move off the lows today looks impulsive, this after a few days of a down move and a corrective looking decline (3 waves down). This suggests that Dow 10,608-618 and SPX 1210-12115 are the next targets and they may indeed be THE peaks we are looking for. We anticipate it to be a choppy, few day affair to get there however.
There is a small possibility that it fails before getting to new peaks (5th wave failures are rare but they happen) but banking on that seems imprudent at this stage. For now the bias remains up to those new swing peaks. Anything below today's lows would suggest a far more bearish and immediate resolution however, so stay tuned.
Almost certainly what we will see on any new SPX, OEX and Dow peaks is the Dow Transports NOT making a new peak, thus setting up a meaningful divergence. That will be good evidence toward a larger bearish resolution we have been looking for.
Additionally, we have the Nikkei in another important decline phase now: a few weeks and perhaps 15%. The entire bounce in the NKY from April 21 was labored and corrective, suggesting the dominant trend remains down from those very important peaks set in March (like our call for the U.S. indices).
Also, the German DAX could be within a handful of points of achieving a similarly important peak as the U.S. markets did in March. Almost all of our indicators are suggesting a top of a multi-year formation may very well be nearby.
Given the coordination of worldwide economic policies (reflation) and the correlation between U.S. indices and foreign equity markets (+93-98% over 3 and 5 years), these markets being in or near bearish trends is further evidence for our larger call. Add the Dow Transports in there too, as per yesterday's intraday comments; the bearish evidence is accumulating.
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