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Martin Armstrong: Analysis for the Week of October 10, 2016

* October 8, 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 1799221 and so far we are trading neutral within last month's trading range of 1855154 to 1799221. 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. Oct. 7, 2016, the market is immediately in a neutral position for right now with still an underlying bearish tone. Dow Jones Industrials closed today at 1824049 and is trading up about 4.67% for the year from last year's closing of 1742503. So far, we have been trading up for the past 3 days since the reaction low made on Tue. Oct. 4, 2016, but the key low was made 17 days ago on Wed. Sep. 14, 2016 at 1615586.

On the weekly level, the last important high was established the week of August 15th at 1872261, which was up 7 weeks from the low made back during the week of June 27th. We have been generally trading down for the past 2 weeks from the high of the week of September 19th, which has been a move of 1.80% percent in a stark panic type decline. Looking at this from a broader perspective, this current rally into the week of September 19th reaching 1844988 has failed to exceed the previous high of 1872261 made back during the week of August 15th. We have seen only a minor reaction rally from the last low for the past 17 weeks. A break of the last low will warn of a continued decline ahead. Looking at this from a wider perspective, this market has been trading up for the past 17 weeks overall.

Critical support still underlies this market at 1739916 and a break of that level on a monthly closing basis would warn of a decline ahead becomes possible. Systematically, my long-term view forecast recognizes that the current directional movement since the low made back in August 2015 has been an extended Bullish trend in Dow Jones Industrials which remains in motion as long as we hold above 1739915 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. We need to see a monthly closing back above 1862200 to confirm the uptrend will recommence.

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

Aiming on the immediate momentum is Bearish on the weekly level yet we did penetrate the week of September 26th's low. Some caution is warranted given the fact that last month closed lower. 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 downside which is warning of a bearish immediate trend.

While the market made a new low last month, our energy models turned up. This warns we may be preparing to rally. At this moment, this market is in a downward trend on all our indicators looking at the weekly level. Honing in on the direction of this trend, we have been moving down for the past 2 weeks. The last high on the weekly level was 1844988, which was created during the week of September 19th. The last weekly level low was 1706308, which formed during the week of June 27th. However, we still remain below key support and key resistance now stands at 1829548 above the market. 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 13 months. The last monthly level low was 1537033, which formed during August 2015, 2015. The last high on the monthly level was 1872261, which was created during August.

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