The uptrend off the March 23rd low appears to be tiring, running out of steam, as evidenced by the MACD that is showing early signs of starting to roll over after having unwound ALL of it's earlier over sold state. So as I warned last week the Dow does appear to want to go lower rather than higher in the immediate future.

Dow Long-term Trend Analysis

The Chinese Coronavirus catastrophe had sent the Dow trading to a near 4 year low of 18,213 on 23rd March 2020, a huge waterfall drop of 38.5% the magnitude of which no one saw coming because it was driven by sheer PANIC in the wake of moronic Governments mishandling of the pandemic that was several orders of magnitude worse than it should have turned out to be.

The Dow's dropped by a huge 38.5%, though not unprecedented, however the subsequently 33% rally to the recent high of 24,300 that many analysts mistakenly auto-refer to as a 'bear market rally' IS unprecedented. So even if the Dow is some 5000 points away from it's all time high, the market is clearly stating that the corona drop was TEMPORARY as my analysis suggested going INTO the late March low that the corona bear market would likely prove to be TEMPORARY, and probably hit bottom late March.

TREND ANALYSIS - The Dow has now retraced more than 50% of the Corona bear market, with the last high being made on the 17th of April and thus showing signs of running out of steam.

RESISTANCE : There is heavy overhead resistance art 24,700 and then 25,300 with the 61.8% retracement level at 25,250.

SUPPORT : Immediate support is at 23,300 with more significant levels at 21,700 and 20,800. With the percentages ranging from 20,500 to 21,250 and 21,900.

TRENDLINES - Short-term nearby trendline support is at 23,900 that will likely easily break. So weak trendline support.

MACD - MACD has unwound all of its oversold state which means that the Dow is ripe for a down leg.

VIX

The 86 high coincided with the Mid March stock market bottom since which time there has been a steady decline in volatility accompanying the steady rise in the stock market.

The VIX's MACD is oversold which at least suggests a corrective rise in volatility to first target 48 and then 60 that should act to contain stock market weakness without revisiting the panic levels of March 2020. However, a move beyond 60 would increasingly imply the Dow looking set to target the 18,200 bear market low, which at this point is a low probability event.

The whole of this extensive analysis was first made available to Patrons who support my work: Dow Stock Market Trend Forecast for May 2020

Preliminary Stock Market Analysis
Fed QE4EVER
Dow Short-term Analysis
Dow Long-term Trend Analysis
VIX Analysis
ELLIOTT WAVES
Dow Stock Market Forecast Conclusion
AI Stocks Buying Levels Q2

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your Analyst

Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.