The S&P 500 (SPX) and Nasdaq Composite (IXIC) made new all-time highs on the 06/06/24 New Moon. On 06/07/24 only the SPX made a new all-time high – a bearish “Rule of the Majority” signal. A U.S. stock bear market continuing until at least early 2025 may have begun.
A “Rule of the Majority” signal occurs when one of the main U.S. stock indices; SPX, IXIC, and Dow Jones Industrial Average (DJI) makes a new high/low unconfirmed by the other two indices.
On 05/20/24 the DJI made its all-time high and declined to bottom on 05/30/24. On 06/07/24 the DJI had only retrace 53% of the 05/20/24 to 05/30/24 decline.
The 15 – minute SPX and IXIC chart courtesy of Trading View illustrates their relationship.
This bearish divergence in proximity to a New Moon is very significant. Also note both indices made their bottoms just after the start of the main trading session on 06/07/24. On 06/10/24 a break of both indices below the 06/07/24 bottoms could also be very significant.
The one – hour SPX and Russell 2000 (RUT) chart shows their relationship.
The RUT – small cap stocks has been in a bear market since November 2021. RUT’s short- term bearish divergence is shocking! The RUT high on 05/15/24 failed to exceed its 03/28/24 peak. Late in the 06/07/24 session RUT broke below its opening bottom and was close to a 50% retracement of the 04/19/24 to 05/15/24 rally.
If a broad-based U.S. stock bear market has begun, RUT is likely to lead the way down.
Traders initiated a 100% short position of RUT non-leveraged funds at the open of the 05/23/24 session. Continue holding short.
Four Dimension Trading 