Stock Market Trends – Weekly Update 07/23/11 © ™

  • Very Long Term
  • Jan 2000 – Present
  •  Step 2 Of 3 Down Completed, Rally Phase Underway
  • Action Status – Follow Long Term Strategy

very long term 07-23-11

  • Long Term
  • Mar 2009 – Present
  •  Step 2 Of 3 Up Underway
  • Action Status – HoldNo Change

long term 07-23-11

  • Intermediate Term
  • July 2010 – Present
  • Large Step 2 Is Almost Complete
  • Action Status – HoldNo Change

intermediate term 07-23-11

  • Short Term
  • June 15, 2011 – Present
  • Step 2 Up Completed
  • Action Status – Holding Short Term BuyNo Change

short term 07-23-11

  • Page 1 – Indicators (shorter time frames)
  • Page 2 – Indexes With 1 Minute Bars
  • Page 3 – Indexes With 5 Minute Bars
  • Page 4 – Indexes With 15  Minute Bars
  • Page 5 – Indexes With 30 Minute Bars
  • Page 6 – Indexes With 60 Minute Bars
  • Page 7 – Indexes With Daily Bars
  • Page 8 – Indexes With Weekly Bars
  • Page 9 – Indexes With Monthly Bars
  • Page 10 to Page 11 – Indicators (longer time frames)
  • Page 12 to End – Growth Stocks (daily and weekly time frames)


Below is a new chart and it consists of the DJ Industrials (black) and a proprietary indicator, which I will call Series 1 (red).   Since the July 2010 bottom, it appears that the Series 1 indicator has had 2 trend breaks and is in its third step up.  You can see a trend line break at February 2011 and again at May 2011.  It has since moved up to a new recovery high (3rd step up).  This leads me to believe that we are trying to achieve a 3rd step up.  Outside forces (politicians) could truncate the rally.

One factor in the favor of a renewed rally, this indicator has consistently rallied through every decline.  Look back to July 2010 and notice how the Dow reacted downward while the Series 1 indicator kept rising.  Only during February and May 2011 did this indicator show short term weakness.  In effect it was telling us that the declines were false and professionals were buying under cover of the correction.


Below is the London stock exchange index and it often is a clue to the future of the US stock market.  As can been seen, it has formed a very congested top area.  A break above or below this area will be significant for the US.  My actions will likely follow in the same direction of a break in this index.

LONDON 07-23-11


A decline below the June 15 lows would trigger a sell signal

The best short term scenario

  • A bottom occurred on June 15 and we are in a rally phase that has returned us to the May 2nd peak.  Now we will see if the market has the power to punch through for significant new highs.

The worst short term scenario

  • The market is in a false rally and it will turn down without significant new highs.


The rally that began in early July 2010 is long in the tooth and showing its age (13 months).  The market internals have been losing momentum and show that the market has been in a lengthy “topping” phase.  This topping can continue for many months.

If the June 15 rally fails to make significant new highs, the market will have signaled a declining phase marking the end of large step two up.

A decline below the June 15 lows would trigger an intermediate term  sell signal .

The best intermediate term scenario

  • The market has resumed the rally in large step two that began in July 2010.

The worse intermediate term scenario

  • A February and May decline were the first and second step down in a larger 3 step decline.  If true, this would call for  lower prices in step 3 down and would likely continue for many months.  Time and price are both important.


From the bottom in  March 2009: large step one up ended in May 2010; large step two up may still be in force.

I might issue a long term sell signal if I believe that large step 2 up from March 2009 has concluded.  Two reasons could make this action possible: (1) the decline after step 2 is greater than the decline following step 1; (2) a step might have occurred prior to March 2009 (Nov 2008 to Jan 2009).  If a long term sell is issued and a resumption of the bull market began after a significant decline, a new buy signal would be issued.  A 3rd step should be of sufficient length to achieve long term tax status again.

The best long term scenario
  • The bull market since March 2009 is not complete and higher highs are ahead.

The worst long term scenario

  • We have begun  a significant correction following the second large step up .

An even worse long term scenario

  • We have begun a bear market


We have entered a very wide swinging market (megaphone formation) similar to that of 1966 to 1974. During that era we had three bear markets with two intervening bull market rallies.  Each bear market had a lower low than the previous bear.  The intervening bull market rallies saw new all time highs before the next bear market began.

Since 2000 we have had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1966 to 1974, the recovery from the first  bear market saw a new all time high (2007 peak). It is possible that we may experience another all time high during the present recovery period.  At the conclusion of the present recovery we will have the third and final bear market. An estimated time for the conclusion of the final bear market is approximately 2018.


  • Glossary is in the sidebar category, Huh???.  This is important reading for understanding this blog.
  • For methodology, see the category Indicators.


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