Market Timing and Price Projections

Table of Contents

1. Introductions

2. Cycles Update

3. Chart of Major Indexes

4. VIX Update

Introduction

Did the market top for now? Perhaps last week, still not confirmed. Certainly, indexes are losing momentum.

I do not have much to add considering the very extensive last two reports. One could make a case that the Elliott wave structures in ES and NQ are completed, but I could see other ways to count that allow more up at the micro level, especially in DJI and RUT. NDX satisfied all existing targets, while SPX, DJI, and RUT satisfied the 40D cycle targets but still have 20W cycle targets at higher levels. At this point, I am not convinced that these higher targets will be reached. I will follow indexes week by week and we will see.

My understanding of cycles and seasonality suggests a pullback into mid-December, the Santa rally into late December, and another pullback into the second half of January. For a more detailed discussion please see my Sunday’s SPX analysis on YouTube.

Let me clarify my statement from last week regarding DeMark sell signals. On 11/22 we had DeMark sequential-9 daily sell signals for ES and YM, and on 11/13 sequential-13 weekly sell signal for NQ. These signals are often early but could precede multi-week or multi-month long corrections. We shall see.

Figure 1 illustrates the historic SPX/VIX ratio, a red flag for a pending correction within weeks. I flagged several examples of extreme SPX/VIX values but the present one exceeds all of them.

Last week I presented an extreme NDX over-valuation chart in terms of the QQQ/IWM ratio. Today I am reinforcing that message, beating the dead horse, by showing the QQQ/DIA ratio. Again, historically high, the only time it was higher, but not much higher, was in late 2021 at the NDX peak. It may have started to correct, i.e. revert to the mean, but it may take a long time to bring it to more normal levels.

Note also strong weekly negative divergences in RSI and MACD relative to July NDX’s high! This signals a significant correction going forward but does not preclude still higher in the short-term (see my discussion of cycles of the Magnificent 7 a couple of weeks back).

Overall, the longer-term picture is bearish, but shorter term there are options. In late October I stated on X (and in one of November newsletters), “buy the dips (BTDs) next couple of months.” The easy part is behind us, in my opinion. Based on my view of cycles, and other factors, such as EW counts, technical indicators, etc., I would say that for the next couple of months, until Spring ’24, the game is BTD and sell the rip (STR). Then expect a significant summer cycle trough, and the stock market low, and likely a secondary low in Oct’24, followed by a rally into late 2025 or early 2026. Of course, I will track developments weekly.

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