The Markets and The Point of Clarity

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Our market insight that we shared with you before the markets opened on Tuesday, May 5th, stated the following:

Time-wise, yesterday/today mark an important “Point of Clarity” according to our models. Therefore, we expect the markets to start revealing their true intentions starting today.

Sure enough, all three US indices (Dow, S&P, and NASDAQ) saw significant bearish price action the past couple of days!

All three indices managed to make lower lows yesterday, in comparison to their April 30th lows, as can be seen in the charts. This is one indication of a potential change of “intentions” for the markets or, rather, a revelation of the “true intentions” for those markets, which is characteristic of the “Point of Clarity” theme that we discussed in our previous newsletter.

Dow 20150506

S&P 20150506

NASDAQ 20150506

When compared to the April 17th low, the Dow did not manage to close yesterday below its closing price on that day. Its intraday low did, however, reach about the same low price level that it made on the 17th. Furthermore,yesterday’s price action managed to violate some important “market intention” guidelines that we track, which is consistent with our “Point of Clarity” theme.

The S&P, interestingly enough, had both a lower close and a lower intraday low yesterday compared to April 17th. As for the NASDAQ, it did not manage to close lower nor reach a lower intraday low.

In terms of pressure curves, the Dow closed yesterday just above its gamma curve. The 17770 price level has been a stubborn one to break through on a closing basis so far. If the Dow manages to close below that level with follow-through, though, the next price target should be around 17490.

The S&P, on the other hand, did close below its gamma curve and, as such, its next lower price target should be around 2057.

The NASDAQ has managed to clear all three curves. Therefore, its next lower price target should be around 4325.

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