Tuesday Update: Template For A Top

The DOW is trading just under round number 23,000. Looking back at 20,000, 21,000 and 22,000, they all show at least a mild pullback before turning back up toward the next round number:

But what is much more intriguing is the chart below. It is a monthly price bar chart of the NYSE Composite Index. As you can see, it goes back all the way to the Nasdaq dot.com bubble and subsequent crash low of 2002. I've embedded an Elliott Wave primary wave count from the financial crash low of 2009, along with Primary trend regression channels from that low, as well as more recent trend regression channels from the low in early 2016. Note also that the momentum oscillator in the bottom window of the chart is showing a clear divergence between Primary Waves 3 and 5, which adds to the credibility of the Primary wave count. 

With both trend channels converging just below current price levels, the market is setting up for what could be a significant change in trend across multiple time frames. That doesn't guarantee that this bull market is about to end, but a break of those channels shifts that potential to the front of the line



*HIMX has closed below its stop of $9.25 and should be exited. For the time being, we are removing it from the Special Situations portfolio, which opens up a new slot for a stock to be named later. Let's see how those channel lines hold up before getting too aggressive on the Long side.