For several weeks the U.S. stock market has had several bearish momentum signals. However, there’s been one factor missing from the bearish equation – a “Rule of the Majority” signal. This phenomenon occurs when only one of the three main U.S. stock indices; S&P 500 (SPX), Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) makes a new high/low unaccompanied by the other two indices. At the open of the 01/31/24 main stock session there was a spectacular “Rule of the Majority” signal!
The one-minute DJI and SPX chart courtesy of Trading View shows what happened.
The DJI opened the session with a gap up of .16% marking a new post 10/27/23 rally high while the SPX went down .53%! The IXIC also made a gap down, its post 10/27/23 rally high was on 01/29/24.
A “Rule of the Majority signal is very effective at identifying major and intermediate U.S. stock market turns. Today’s signal along with several other bearish momentum divergences increases the chances that a very significant move down may have begun today. Perhaps even a bear market that continues throughout most of 2024.
The daily NYSE – 52 – week high ($MAHN) chart courtesy of Barchart.com updates this internal momentum indicator.
This indicator has been very bearish for several weeks and implies there could be a sharp and deep decline for at least several trading days.
Traders are short 100% SPX non-leveraged funds from the opening of the SPX session on 01/29/24. Continue holding short.
Four Dimension Trading 