Market Direction and Stock Trends

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:::: Dow Jones Industrials Index (DJIA) »» Weekly Summary Analysis
By: Marty Armstrong | May 21, 2022

The Dow Jones Industrials closing today at 3126190 is immediately trading down about 13% for the year from last year's settlement of 3633830. As of now, this market has been rising for 2 months going into May reflecting that this has been only still a bullish reactionary trend. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 3063576 while it's even trading beneath last month's low of 3291315.

Up to now, we still have only a 2 month reaction rally from the low established during February. We must exceed the 3 month mark in order to imply a trend is developing.

ECONOMIC CONFIDENCE MODEL CORRELATION

Here in Dow Jones Industrials, we do find that this particular market has correlated with our Economic Confidence Model in the past. Our next ECM target remains Mon. Apr. 10, 2023. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2002. The Last turning point on the ECM cycle high to line up with this market was 2007 and 2000.

MARKET OVERVIEW
NEAR-TERM OUTLOOK

The Dow Jones Industrials has continued to make new historical highs over the course of the rally from 2009 moving into 2022, which has been a run of 13 years warning that timing wise a pause remains possible. Currently, the market has dropped back and is trading beneath the previous year's close warning of a potential correction in play.

This market remains in a positive position on the weekly to yearly levels of our indicating models.

Focusing on our perspective using the indicating ranges on the Daily level in the Dow Jones Industrials, this market remains in a bearish position at this time with the overhead resistance beginning at 3186279.

On the weekly level, the last important high was established the week of April 18th at 3549222, which was up 8 weeks from the low made back during the week of February 21st. We have been generally trading down for the past 4 weeks, which has been a very dramatic move of 13.68%.

Looking at this from a broader perspective, this last rally into the week of April 18th reaching 3549222 failed to exceed the previous high of 3582428 made back during the week of February 7th. That rally amounted to only eight weeks. Subsequently, the market has breached that low of the week of February 21st and has closed beneath it warning the market is weak. Since then, the market has consolidated for the past 4 weeks. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action. Looking at this from a wider perspective, this market has been trading up for the past 6 weeks overall.

INTERMEDIATE-TERM OUTLOOK

YEARLY MOMENTUM MODEL INDICATOR

Our Momentum Models are rising at this time with the previous low made 2018 while the last high formed on 2021. However, this market has rallied in price with the last cyclical high formed on 2021 warning that this market remains strong at this time on a correlation perspective as it has moved higher with the Momentum Model.

Looking at the longer-term monthly level, we did see a correction from the key high of January for one month. Since that low, however, we have consolidated for 2 months. Nonetheless, we are trading below last month's low of 3291315, warning that a month-end closing beneath this level will signal a reversal of trend to the downside is starting to unfold. Meanwhile, the past two months has witnessed a rally of 2.18% percent. A month-end closing below 3291315 will warn that the market is losing its upward momentum and should retest support below. It will take generally a monthly closing above 3549222 to maintain a near-term upward rally.

This market is trading well beneath that high of January which was 3695265 by more than 10 percent. Critical support still underlies this market at 2669110 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak trading beneath last month's low.

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