The damage has been done. It is confirmed that we are in the 4-year cycle high to low selloff phase. A 4-year cycle high to low selloff can last anywhere 3-9 months or 2-3 years. We will get more clarity after the quarterly closing on October 31, 2018.
On Friday October 26th, we needed the DOW, S&P 500 and NASDAQ to close above 24965, 2676 and 7197 respectively to start a relief rally on Monday October 29th. All three indices failed to close above these numbers, therefore we should expect the market continue to sell off at least until 11/05/2018.
The DOW is 17 weeks into the weekly cycle that started on 06/29/2018. We have 3 high to low bars already. The lower channel line will be the 1st line support. The ultimate goal is for the DOW to test the April low at 23344.52 which we believe it will be violated either in this wave or the next down wave.
The bottom line is that the market has entered the 4-year cycle correction phase that we need to stay out of the harm’s way. The market will need some time to heal from the structural damage. The midterms outcome will probably predict how long and how deep the correction will last. During the correction phase, we will see the market to rally across from below to be above the 30-week MA sometimes, but that shouldn’t cause us to enter the market because the relief rallies normally are bull traps.
Stay calm and the bull market will come again when you are expecting it the least. Right now the major course of action is to preserve your investing capital. Live to fight another day.