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.
The stock market has suffered major technical damages across the board last week. Historically midterm election years Octobers are downright stellar. These Octobers have been a time of turnaround, with 12 post World War II bear markets ending in October, including the most recent, 1987, 1998, 2001, 2002 and 2011. Is the 2018 midterm election October an exception or will it follow the statistic to endow us a year end rally?
The severity of the selloff today has changed the outlook of the market. The important question right now is how long and how deep will the correction last. Is it time to get out the market? We are going to look at different indices an stocks to try to make sense of the madness.
Finally the DOW made an outside reversal week on 10/05/2018. This is the start of the seasonal correction. It is 14 weeks into the current weekly cycle that was started on the week of 06/29/2018. This correction against the January 2018 high does appear to be a selling off of a double top.
The DOW and S&P 500 both closed at all time high last Friday, yet the NASDAQ is lagging behind. At the end of August, NASDAQ was in overbought condition with 8.81% over 30-week moving average. The current three weeks correction has been supported by the 10-week moving average.
