Market Direction and Stock Trends

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Martin Armstrong: Analysis for the Week of December 05, 2016

* December 3, 2016

Dow Jones Industrials Index Cash

We should see a trend change come this month in Dow Jones Industrials so pay attention to events ahead. Last month produced a low at 1788356 and so far we are trading neutral within last month's trading range of 1922529 to 1788356. We need to breakout of this range to confirm the direction. Therefore, a close above will be bullish and a close below will warn of a possible decline. As of the close of Fri. Dec. 2, 2016, the market is immediately in a bullish posture near-term with a distinct bullish undertone suggesting caution on the daily level trading below the December 2015 high, however this was an inside trading day so technical closing support lies at 1913879 and a close beneath that will suggest a retest of support first. Dow Jones Industrials closed today at 1917042 and is trading up about 10% for the year from last year's closing of 1742503. Thus far, we have been trading down for the past 2 days, but this has been an inside trading session warning caution following the high established Wed. Nov. 30, 2016.

On the weekly level, the last important high was established the week of November 28th at 1922529, which was up 4 weeks from the low made back during the week of October 31st. We have been generally trading up since the low made week of October 31st at 1788356 for the past 4 weeks, which has been a sharp move of 7.50% percent in a stark panic type advance. The broader perspective, this current rally into the week of November 28th reaching 1922529 has exceeded the previous high of 1844988 made back during the week of September 19th. We have seen a rally so far from the last low of 1788356 for the past 4 weeks. Only a break of that low would signal a technical reversal of fortune, however, the market remains strong at this time. Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 11 weeks overall. Interestingly, the Dow Jones Industrials has been in a bullish phase for the past 15 months since the low established back in August 2015.

Some caution is necessary since the last high 1835136 was important given we did obtain two sell signals from that event established during May 2015. Critical support still underlies this market at 1561754 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Subsequently, the market made a low in August 2015 at 1537033 electing four buy signals from that event. This warns that the trend is robust moving forward. Critically, my broader analysis anticipation recognizes that the current directional movement since the low made back in August 2015 has been a long-term Bullish trend in Dow Jones Industrials which remains in motion as long as we hold above 1601364 on a monthly closing basis. It is incredibly important to identify the broader trend for that is the underlying tone. It is wise to take position counter-trend only with this understanding of what you are doing.

Consequently, this has been a 1 year rally in motion since 2015.

Directing our attention to the immediate momentum is Bullish on the weekly level yet we did penetrate the week of November 21st's low. This is warning to pay attention since last month had closed higher so the upward momentum is weak on the monthly level. To date, the market has exceeded last year's high of 1835136. In order to maintain an upward advance, we need to close above last year's high at year end. On the weekly level, last month was an outside reversal to the upside which is implying we have a bullish bias currently.

While the market made a new low last month, our energy models turned up. This warns we may be preparing to rally. Currently, this market remains in an uptrend posture on all our indicators looking at the weekly level. We see here the trend has been moving up for the past 4 weeks. The last weekly level low was 1788356, which formed during the week of October 31st. The last high on the weekly level was 1922529, which was created during the week of November 28th. On a broader perspective, this market remains in an uptrend posture on all our indicators looking at the monthly level. We see here the trend has been moving up for the past 15 months. The last monthly level low was 1537033, which formed during August 2015, 2015. The last high on the monthly level was 1922529, which was created during November.

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