Last week was one of those weeks where I was completely dialed in and laid out the roadmap very close to the way it worked out. If only I could do that every week. Of course, it helped to have the aid of the time windows. As you know markets peaked in the 610-day window to the August 2015 bottom, which is the Dow bottom.
The biggest story this week has undoubtedly been the big falls in the stock markets. The Dow Jones Industrial Average index fell by more than 1,000 points for the second time this week on Thursday. Similar sharp declines have been evident in other major global indices. Friday was no different as the major European indices sold off across the board this morning, before bouncing back ahead of the U.S. open.
The markets plunged Monday, with the Dow falling nearly 1,600 points in the largest intraday point decline ever. This "February 2018 market crash" caused us to look back at some of the more recent historical market moves.
The sell-off that followed the positive January employment report on Friday should not have been a surprise. It was the typical market reaction to strong economic news during the early stages (relatively speaking) of a tightening cycle. Positive economic news could be inflationary and push the Federal Reserve into a more aggressive tightening phase.
You can’t say I didn’t warn you. A week ago, markets, especially the Dow, hit 610 days from the August 2015 bottom. Most market participants are not aware of it unless they read me or a small handful of other market cycle experts. The challenge I’ve had is the bigger time windows from last September and October didn’t seem to fire off as usual. It was the first time in 19 years an important window didn’t seem to fire off.
The Dow Jones Industrial Average .DJI fell 665.75 points, below the psychologically important level of 26,000, which it had just broken through for the first time two-and-a-half weeks ago. The Dow's decline of 2.5% was mirrored in other major indices. The S&P 500 fell 2.2%, and the Nasdaq Composite declined 2%.