The CUSP? US Indices

I’m postponing the conclusion to the ‘Uncertainty Series” until tomorrow.  Today, I want to consider the current position of the US Indices.

What I want you to note:

• There was a swing high around in the first days of September.
• Then around Sept, 7 to 18, the indices formed a low.
• After the low, the Dow and S&P have moved up strongly, while the Rusell (US 2000) and NASDAQ (NAS100) have continued the sideways move.

Now, why did I want you to make the note? Take a look at the next two charts.

Notice the weakness projected to mid-Oct. So, the strength last week, especially in the Dow, was out of character. (There were other indications, e.g. the refusal to head south despite all the trade-war talk. But for this post, I’ll focus on what the seasonals are saying).

So, how do we take advantage of the seasonal divergence?

Friday’s price on the Dow could mark either:

1. A top until the seasonal low comes due in mid-October. We should see the start of a strong downside, preferably today.
2. A pause following the three-day upmove. We should see a resumption of the up move.

If (2) is in play, we should see a buying opportunity.

The chart above shows the time zone (from 8:00 am UK time), and price zone where I want to see a setup and trigger occur.  Should the zone not hold, I’ll pass on taking a trade today.  The core profit target is 26945 to 27195 zone.