Barely a week ago it was beginning to appear as though both Santa had come early AND that the Dow had just missed breaking above 18k early December, before turning lower which with each 100 point Dow drop emboldened the bears to once more start fantasizing of mega-phone patterns accompanied by proclamations that the top was in and a new bear market had begun that reached maximum intensity just as the Dow put its bottom in at 17,067, doing an about turn rampage to a NEW All time high ABOVE 18,000 to close today (Christmas Eve) at 18,030. Thanks Santa!

if you have been following my analysis for the past few months than you will know that I had been expecting the Dow to break above 18k before the end of December before entering into a significant correction during January 2015 as indicated by the following articles -

06 Dec 2014 - Stock Market Santa Mania Rally, Dow 18,000 New All Time High
23 Nov 2014 - Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome
16 Nov 2014 - Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable?
09 Nov 2014 - Stocks Bear Market Catastrophe as Stocks Flash Crash to New All Time Highs
31 Oct 2014 - Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start
12 Oct 2014 - Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015

The Dow's strong push towards a break of Dow 18k by early December had both put the market way ahead of its schedule into a significantly overbought state as the market required an imminent correction that was just failing to materialise, either the market corrects or it would be setting itself up for a far more significant AND earlier correction i.e. to commence BEFORE year end as I last wrote on 6th of December -

Technically the market needs to correct NOW, but the market is in the grip of santa mania as it appears determined to imminently set a new all time high above Dow 18k. In my opinion the stock markets relentless climb higher is setting itself up for a more significant EARLIER correction, which means that it is increasingly looking likely that the January correction could start BEFORE the end of this year.

As the MACD illustrates the correction to Dow 17,067 has acted to unwind much of the stock markets overbought state which means that the rally could continue to propel the Dow higher. However, on the basis of my existing in-depth analysis which dates back to 12th October, I just don't see it happening as we have achieved target and are now entering into the window for a correction which means with each new trading day gravitational pull on the stock market will get that much greater, ultimately setting the market up for a sharper break to the downside.

I will come back to an in-depth analysis for the Stock Market before the end of this month as my immediate focus is on getting the Gold price analysis and detailed trend forecast done and dusted, so ensure you are subscribed to my always free analysis to get both in your email in box on completion.

Source and Comments:http://www.marketoracle.co.uk/Article48771.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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