The Dow Jones Transportation Average Index presents itself as the weakest of all the major US equity indices, as it was the first to fire enlighting strong sell signals as early as Wednesday. This index additionally lost its likely most important yearly support decisively at the end of the week, while Dow Jones, S&P 500 and the others are still struggling to decide whether they want to do the same.

Think, we currently observe the first stage of a stronger US stock market downtrend cycle (in price & in time), what officially began at Tuesday`s fresh alltime-high in the S&P 500.

 

 

Monday will be the 60th Trading Day (TD) after 11/03/2020 US Presidential election date. The big question after this past week bearish stock market surprise is where are we located in the above seasonal cycle which shows the average S&P 500 performance following a change in White House Party? It shows the Trading Days following the Election Day.

While the average 70-years seasonality above projects a -4% price drop starting at mid-January (the first major important high of the year), into the FINAL low of the entire year towards mid-March the GUNNER24 Method offers that for this year 2021 at very important late-January to early-February intermediate highs even a full -20% stock bear market decline cycle could be triggered, which might run for 3 to 4, maybe even 5 month candles.

The average 70-years experiance above also predicts that there is a great danger that at so far seen January highs the most severe correction cycle regarding the price of the entire year may have begun.

... On the other hand, an intermediate bull market extreme could still be pending ... OR, maybe only lower highs compared to the so far printed stock market highs might come true in course of the next few days and into next week, when we remember that in strong bull market runs the end of the month is 'often' (not always) the time where the smart money takes some profits off the table, only to come back immediately when the new trading month starts. Further, Monday is the first trading day of a new month and 'often' (not always) see the inflows from pension funds, 401k`s, company bonus plans and dividend reinvestment schemes.

So, with 80% probability the first intermediate year highs are finally made, but it is allowed and maybe possible that within a last hurray small higher year highs might come true until February 9th or so. My main assumption for the moment is that there will be another quite stronger US stock market bounce over the next few days, what only will be able to print a lower high compared to seen year highs, followed by the next, then second, strong US stocks downwave...

Somehow it seems hardly possible to me that the S&P 500, the NASDAQ`s and the Dow Jones will be strong enough to reach again higher cycle highs in the coming days. The Dow Jones Transportation signals are simply too bearish and too brutal for that. The IYT ETF is now losing one important support after the next. IYT is the iShares Trust - iShares Transportation Average ETF and seeks to track the investment results of the Dow Jones Transportation Average Index composed of US. equities in the transportation sector:

 

 

After a new alltime-high, a volume spike and a 2-week Rounded Top the IYT lost its for 8 long months supporting 50 day MA (moving average) and thus has activated the future test of the extremely important 200 day MA bull market main support.

Cause the 50 day MA has supported for so long it is a yearly support threshold.

==> IYT def. lost a yearly support at this week close and therefore likely has to test the nearest yearly support below what is the 200 day MA is most important future bull market support and an ideal MAJOR pullback downmagnet.

And if the stock markets wish to drop further towards mid-March time window the IYT ETF could hit the 200 day MA big bull market main support point at 195.50$ surroundings. These daily signals are stronger ones, accordingly we might see a straight line drop into 200 day MA and a 192$ or so within days/within 1-2 weeks. Such option then would be a sell-off panic cycle.

Within a possible or maybe even due early-February Dead Cat bounce the IYT could re-test downward gap at 50 day MA bigger resistance upmagnet at 224$-222$!

Watch it also below. The 224$-222$ range for the next few days and for the entire next trading week represents a combined daily & yearly upmagnet resistance.

We wanna sell-short at this yearly resistance magnet for a 195.50$ shortterm downtarget what is at yearly 200 day MA support surroundings for mid-March 2021 and within a future support range what now usually should provide massive bull market support because it should have morphed to major support area on a DECADE base:

 

 

IYT ended the year 2020 far above the light-green area what offered longlasting major resistance range towards end of the 2010-2019 DECADE. Please observe that the important January 2020 pre-corona cycle high was the last negative test of the 202$-194$ or so range. The very first year of the new 2020-2029 DECADE closed far above this „former" DECADE resistance range and this is a combined yearly & DECADE buy signal.

What is - of course -, an unusual rare and a major overall bull market continuation signal. This new DECADE bull market support range is in nice harmony to in course of 2020 well and for long tested 2nd double arc area within above at # 1 // 2020 Low anchored weekly 7 Candle GUNNER24 Up Setup.

The so far # 43 // 232.97$ ATH pretty accurately is made at natural uptarget of lower line of 3rd double arc and at bull market highs there is no week close above this lower line of 3rd important uptarget. Means, this lower line of 3rd now should offer stronger downward oriented future main resistance.

==> Lower line of 3rd double arc seems to be most important future resistance on monthly and on yearly base! At same time it is an attractive backtest resistance upmagnet!

The obvious stronger negative energy starting at and triggered by lower line of 3rd rail is now breaking the within setup naturally anchorable green-lined Gann Angle support what is an angle support since major # 1 // 2020 Low. So this Gann Angle is a relatively steep running yearly support, what now is finally broken at often most important fourth test.

==> Nearest yearly support rail, the yearly Gann Angle support now is finally broken on weekly closing base!

==> This heavy GUNNER24 Sell Signal is triggered quite early in the year and in combo with underway daily 50 day MA sell signal, first activates the very first test of the 2*1 Bull Market Angle in trend direction which now should be overall down!

Second, as it seems, within weeks the market should retest the 202$-194$ DECADE bull market support range & weely 2nd double arc future main support area.

There is a triple weekly GUNNER24 Support Magnet existing, what resides at a 195.50$. This baby is formed by ACTIVATED down-objective of 2*1 Bull Market Angle, the natural GUNNER24 Horizontal at 195.50$ (dark-geen dotted) and the upper line of 2nd, often ideal and above all quite normal arc pullback rail. Together with the future daily 200 day MA bull market main support this triple GUNNER24 Main Support magnet unites at 195.50$ surroundings for mid-March 2021!

Within a now nicely-confirmed and likely started multi-week correction cycle the 195.50$ should be worked off, because this is the most ideal backtest support magnet!

==> The heavy combined daily & weekly & yearly & DECADE 195.50$/mid-March 2021 support magnet is a major important monthly downtarget. This is nearest most strongest support below and could be hit within a quite substantial multi-week pullback!

==> A rapid backtest of the combined yearly (Gann Angle & 50 day MA) resistance upmagnet at 224$ to 222$ until end of next week represents the Gentleman`s sell-short entry!

 

Be prepared!

 

Eduard Altmann