The Market Bulls Will Throw In The Towel At These Levels

Down   Chart

This month is shaping up to be a strong negative month for the global equity markets. The S&P 500 is down a whopping 11.34% for the month and 3.9% on the year. The DOW is a little better-down only 9.58% for the month and 3.45% for the year.

Despite today’s late covering rally, the bigger picture indicates that we are down overall on the week and the month.

Here are the levels that if, and it is an if, the markets break, then the stock market bulls will throw in the towel.

Here are the key levels of support for the month of May for the major indices:

SP500 - 1044
DOW - 9,835
NASDAQ - 2,100

Let's see how the markets act for the balance of the month. It will be interesting.

Every success,
Adam Hewison
Co-creator, MarketClub

42 thoughts on “The Market Bulls Will Throw In The Towel At These Levels

  1. Thank You for all you do. I really appreciate it.
    Adam, what new information can you give us on gold?
    Have a great day.....

  2. Even though I'm open to different views, I have come up with my own Indicator to assess the market based on market internals after many years of disappointing reliance of others advice regarding my trading and investment in the stock market.

    However, I have developed respect to Adam Hewison and what he says. This is what I regard as unbiased technical analysis at its best that I have seen for a long time.

    I was a student of Joseph Granville and learned a lot from him in the 80's. But after his infamous call in early 80's and other disappointing experiences with stock market advisers, finally I decided to take matters into my own hand and be responsible for my decisions and actions.

    As I learned reading dozens of books, yet still doing it all wrong and atill losing money along the way, that it was I who behaved and acted wrong using my emotions instead of using my intellect and a good system and discipline. I have also devised my own Indicator to assess the market's direction and which way it is heading besides using both fundamental and technical analysis in trading individual stocks. I'm doing fine. Now I know how to keep my emotions and bad habits out of my trading and investing, plus apply a good discipline in following my system that fits my own situation.

    I also have developed a discernment for what is valuable and good advice when I hear it because of my doing my 'due diligence' both vis a vis the market and stocks. Adam way of analyzing the markets has indeed earned my respect. Even though I do not like making any projections or forcasts, I still see his combining a lot of good knowledge and experience in his projections.

    Thank you, Adam.

    Respectfully, John.

  3. Adam,

    I want to first thank you for your service. Its great!

    You know what I find that is almost magical? Look a Fib Retracement of the DJ-30 from the high back in late 2007 to the low in mid 2009. It's weird how that works. Hopefully if we bust through your number to the down side we will bounce off 9443 the 38.2 retracement line. The 23.6 line could be very painful if we have to go there; if you didn't follow the triangles.

  4. To me this market has seemed to trade around the EURO/USD. The market appeared to move up today as the EURO moved higher off 1.22ish.

    Longer term, the Euro chart looks bearish and there seems to be no will in Europe to act like a coordinated group of countries. I say, the Euro continues to fall, with a few bounces on rumors that the EU might step in. I think this is likely because historically, the European nations dont really like each other all that much and are too culturally different in their thinking to support each other --especially to the tune of 1 trillion. The Germans and the French wont be able to get their people behind the bailout.

    On technicals, maybe we get a bounce here up to Dow 10,700 or so, which fails---then its head and shoulders look out below. Good Luck.

  5. gajendra sounds like youve been smoking too much ganja! hahaha this is the perfect environment for gold gajendra ! two koreas in conflict with each other, usa politicians asking help from mother china to calm baby north korea,greece in financial trouble,spain and portugal to follow, as well as rest of europe,in huge debt ! as well as usa in deep financial crisis,oil spill as a topping to the cake..... it all will lead to gold to new highs ! gold bugs tried to warn politicians to rein in spending - spending money the govts didnt have.....warp speed on the printing presses of making more money which will one day lead to HUGE inflation... cause no matter whos in office - taxpayers will pay for the stupidity of the politicians who let the spending go out of control- spending way beyond their means- govt ,people and corporations !

  6. I think will have to be a (CLOSE) below 1044 on the daily SP500 to confirm long Term Short

  7. I am a bear, a raging bear -- when the time comes, shoot me!

    The only salvation for the US market indices is to let DX (DXY) drop to well below 50. Simple logic is the indices are priced in USD and the illusion of a healthy stock market can be obtained, at this juncture only with a weak dollar.

    This year, with a strong dollar, US uncompetitiveness in world markets could see unemployment (real unemployment numbers) add another 10% and the fallout of that could be realestate prices dropping another 30 to 40%. The excess of unsold inventory will put additional serious constraints on all of the construction industry.

    A recent interview raised the scenario that China will soon be able to produce world class quality automobiles at one-third of the cost of Detroit. What then, another bailout, protective tariffs or massive workforce layoffs?

    You cannot have a healthy stock market if the amount of discretionary spending dries up. It is not there to support the profitability of the listed companies nor to invest.

  8. Thanks for the info. It is spot on. The monthly Triangle on S&P and DOW are given today. I am still hoping for a correction down to the 38% retracement level and not more. It is time to short the market or be in cash. A few of my watched stocks have already triggered my short entry price. Since there is a lot of up and down, even the short entries need to be monitored closely.

  9. PiercePCassidy, yes, the averages bounced off the "support" but it will soon turn into resistance. I think the Dow will test the June 2009 highs in the range of 8600-8800. That's my take on it FWIW.

  10. Thanks for the update.

    I feel the market will decline for the next week or two and I agree that the 1040-ish level for the S&P is a good bottom call.

    As for my outlook on the next 4-6 months, I think this current trend will reverse and head upward from June through late Summer, before we see a potentially larger downward movement into the Fall.

  11. This morning (Tues) all the levels suggested were broken through.

    At 11 AM they are all back on the high side.

  12. Peter Grandich at is posting exactly the same numbers before "putting on his bear suit".

    Is this a coincidence?

  13. So now EU is going to take away money from member states and their voting rights too.

    Is this really balm for the markets or perversely designed to roil them? Or are the EU leaders just so out of sync with both the markets and their own EU democracy that a majority group among the 27 ministers think they alone are going to decide to take away internal EU subsidies and voting rights for member countries that run any debt?
    What happened to the Treaty?

    Also, which member countries? Where are they going to set the limits? How is this going to work? Finland is the only debt-free nation in the entire Eurozone. Almost all the Eurozone countries are over the 3% limit for deficit spending!! So obviously the PIIGS are being set up for the slaughter, since they have incurred the worst debt in the eurozone.

    But this is supposed to be a Civilised Club. How are the affected countries going to react? What is the point of a Club when you don't have any votes or advantages any more? Hello default and exit!

    The ministers are obviously more incompetent than we give them credit for. What misguided, destructive and ineffective measures. The ministers may ban hedge funds, ratings agencies and derivatives and proprietary trading. The system will still stand. But when they ride roughshod over the constitution things are no longer stable.

    If they can do what they have already done one wonders: what are they going to ban next? Their own Parliament, perhaps? Foreign banks, as they nearly did the other day? They are behaving like 27 bulls in a china shop. One is entitled to wonder: where is this all going to end? In an authoritarian European superstate, or a disintegrating eurozone and the complete demise of the euro?

    On another level: are they panicky, or just plain hysterical? Why don't they deal with the problem, which is a lack of a common fiscal policy, Treasury, and a central bank which has a mandate to achieve not only low inflation, but also growth and employment?

    The world is in very shaky times indeed. See:

    Then today, CNBCs Art Cashin who has seen decades of stock market situations and quirks in the economy, makes some sage comments on the present pivotal moment in the markets and the global economy.

    Note that systemic risk are the two global buzz words again, while the European leaders have no idea of what they are doing, and fiddle while Rome is burning.

    1. Time to think different, Euro >down , USD > up. USA says thats not how we want to play the game, Europe & Britian are in hock to USA from there little party they threw in WW1,WW2. What we need is a party held in the emerging countries like Korea after all the last party we held there we managed to mine and stockpile 40 years supply of tungsten. Yep that should cure the unemployment and fix the Dow.

  14. svm currently up 7.81% right now.... yes.... silver stocks do go up when the price of gold goes higher...usa dollar at 86... cant really see it going past 90 cents...usa dollar will be overbought soon and then gold will really take off................ have a splendid day! cheers

  15. hahahaha weak for the market good for my gold and gold stocks...more leverage with gold stocks ... gold goes up 2% my gold stocks up multiples of that today example ngd 6% pzg 5.77% ng up 5% so you see now... usa dollar will hit a peak soon then gets overbought then starts the nice trek down...causing gold price to head even higher 1:50 pm and price of gold is 17 dollars UP compared to fridays close.... all the best.. and oh yes elkojohn ... im soooo happy GOLD MADE A NEW HIGH THIS YEAR AND WILL CONTINUE GOING HIGHER HAHAHAHAHAHAHAHAHAHAHA

    1. Tomorrow will be high or day after, Gold will start second leg of downward journey.

  16. Any thoughts trading the markets long or short if we are near the support levels? (S&P500: 1044, DOW 9835, and NAS 2100)

    My hunch is to be out and wait for a break below those levels. But others suggest going long just above those strong support levels to participate in a retracement rally...with stops set just below the support.


  17. Another way to look at this timing issue is to note that the average bearish rise in the VIX over the past several years has lasted 34.88 days, while the average bullish decline in the VIX has lasted 55.88 days (very Fibonacci-like). The time from the April 12 bottom of the VIX at 15.58 to the supposed high of 45.79 on May 20 has been exactly 38 days. My take therefore is that we have already put in a bottom on the S&P 500. Although I see that futures are strongly negative again this morning.

  18. Interesting thread, guys. I don't see the 1044 as the level, the low from Feb everybody is referring to is around 1065. Am I missing something or looking at the wrong chart.

  19. Did not we went through 200 MA level already. Also on Friday first 3 minutes volume 130 million whille DJI was down motw than 120 points, while last 20 minutes rally of 120 points came with 37 million. Looks to me suckers rally. I am long SRS, SMN and FAZ. Looking into VIX

  20. Thank you Mr Hewison.

    s&p dropped below the 200 daily ma at about 1102, (May 20) which is bearish and I guess did not go unnoticed. Anyway, should have been short since the MClub excellent signal at 1114.

  21. I tend to agree this is a very dangerous juncture - more likely to go down than up. However... I do wonder how in all the past corrections for the year (though less deep) the recoveries that follow simply defy normal rules which some suggest is because of the absolute FLOOD of cash from the printing presses. It seems to seek out equities since nothing else seems to offer the return. An odd performance to be sure since the VIX peaks would normally drive most people to cash. MAYBE THIS TIME it the real deal. The printing presses have lost the confidence of investors at last?

  22. Market looking quite weak, but on the positive side, QQQQ closed back above the 200 ema and IWM bounced up off the 200 ema and could not close below it. The volume was strong and will probably be enough to count as an accumulation day. "Dead Cat", I am not sure, but I will be ready to go with it either way.

  23. Adam, your call on the SP500 was spot-on when you went into cash. Your trade triangles are giving me increased confidence as to when to buy and sell individual stocks. The trend lines are invaluable.


  24. Only about 4% down to go to hit that support on the S&P. After the false relief of Friday and Monday the following 4 days could be sour. 1044 could be broken by Friday. This could be a cliffhanger.

  25. Hi Adam

    A little typo crept in there. I think you mean 1044 on the Dow?


  26. Hi Adam,

    aside from the equities can you advise where you feel the AUD is going. I saw you put a monthly red arrow in just recently. I have big Aussie exposures both assets and liabilities so wanna get this right if I can!!
    thanks for all your help to date!!



    1. Sonja,

      Thanks for your feedback.

      I wish I had a crystal ball to predict the future. but that is not the case. What we do have is our Trade Triangle technology that does a good job of getting it right. I would advise following that path.

      All the best,

  27. Thanks for the update.
    Had a nice long belt up candle with a support tail,
    but I'm thinking if the S&P can't get to a New 3-Day High
    this will be just a ''Dead Cat'' bounce.

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