Dow Jones Industrial Average: Get Out Of The Stock Market Before It’s Too Late [Dow Jones Industrial Average 2 Minute, ProShares UltraShort Dow30 (ETF)]

bearbull21Larry Edelson: Yes, I am bullish on the U.S. equity markets long-term. But right here and now is a very different story.

Look, the S&P 500 Index (INDEXSP:.INX) soared 32.4 percent higher last year without much more than a five percent correction along the way. The phrase over-bought doesn’t even begin to explain how extended this stock market is right now.

European stocks are even more over-bought in my view and both markets are well overdue for a correction — and I anticipate a substantial selloff — worse than many investors are expecting!

The Dow Jones Industrial Average (INDEXDJX:.DJI) is eventually going to well over 31,000; that’s my big-picture view. But it’s not going to happen until all the current complacency and bullishness is shaken out of the markets.

From every measure I look at, stocks are overbought and ripe for a major selloff. Europe’s equity markets are headed for a far deeper and longer selloff.


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Let’s take a closer look now. Here is a monthly timing chart for the S&P 500.

It actually gave a sell signal at the end of last October. Being a monthly timing chart, it can be off target by as much as a few months, as it has been.

Yet, the S&P 500 is only up about 5.7% since that sell signal was issued. Not all that much. Especially when you consider that there are very few stocks that have pushed the index higher since then, with the majority of stocks either down or sideways since.

Far more important is the slope of the impending decline. As you can see, it is nearly straight down heading into the end of May. In other words, we are on the cusp of a MAJOR pullback, one that may have already started.

Yes, the S&P 500 has wandered to new highs since October, but the Dow Jones Industrials has not, and it actually peaked on the last day of December. This non-confirmation between the two indices is very bearish.

Moreover, as I have said all along, the Dow Industrials will not break out and start its new leg to 31,000+ until it closes decisively above 16,650. The high thus far, intraday, was 16,588.25.

I don’t own one single stock and I won’t own any until the correction plays itself out, or the Dow closes solidly above 16,650.

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