It’s a Schism-Based Stock Market

Good Morning:

 — Our algorithms brought subscribers back into the stock market (S&P 500 Index) beginning at 4113 over a week ago. But the Archimedes’ Hourly strategy tripped a sell signal at 4132.50 overnight, and the Daily strategy also tripped a sell signal at 4121 in Globex as I am writing this. We have been rotating some of the position when it is overbought and picking it back up at the 5-period line. But the weight of the evidence calls for a short-term turn today, which appears to be coming earlier rather than later.

 — We accumulate on the 5-period line in both strategies until it stops working. Price discovery much below the 5-period line triggers our stops. While it may seem somewhat of a conundrum, subscribers understand the approach.

 — The big picture in the Monthly Chart above shows the schism between a rising market since last October and the black swans circling above prices. A wide range of inept policies by political and financial institutions brought us to this point in only two years. Note the 2000-2002 bear market out to the left side of the chart with our M-Square framing. It is a close analogy to the current market.

 — “C” waves are dreaded. But as we saw in the March 2020 China Virus crash, they don’t always present. But carry the risk forward in our narrative because price reached the top of the consolidation triangle at the April 4 high, around 4138.

 — And when today is a short-term turning point on the daily chart as can be seen below, caution is elevated.