Today we will focus on the short-term.
We have not had a volume bar day since 12/26:
And we can be supremely confident we will not have a change in short-term trend without such a day. Thus, the two most likely scenarios for a short-term bottom here are:
A very high volume day (5bln+) to the downside, should signal a short-term bounce is finally on, or, more precariously,
A rip to the upside day on heavy volume, your typical, short-term, “rip-your-face -off” type of rally.
We had short term buy signals throughout this short-term drop - both Volume Tunnel buys as well as the Actual-Historical Volatility buys, but each time, the 4% rule kept us short, and the drop persisted. This is not to say that those “buy signals” won’t work out profitably here.
Currently, we are still under a 4% New Daily Lows Short/Flat/Hedged signal, and this may continue for a few days too - this drop could continue.
The factor to watch here is the volume bars - those will tell the tale.
We are about to embark on a period of “Extreme Vulnerability” in another week unless we see a day of single-digit Daily New Lows on NYSE, which is very unlikely this from all-time-highs now, in a market this thin.
So despite all the optimism about 2025 - and the presidential election years cycle, and “years ending in 5,” this market is very likely going to get smashed this year, and likely starting in the first half of the year, probably the first quarter
Yet I don’t think this recent drop from all-time-highs is the beginning o
f the major selloff, but more of a topping-type action we are currently in. The reasons are that we have not seen the usual things you would expect on a major selloff :