S&P 500 Index Faces Bearish Cycle and DeMark Exhaustion

s&p 500 index time price cycle year 2021 investing chart

Over the past 4 months, a 32-calendar day Low-to-Low cycle has formed for the major stock market index the S&P 500.

This cycle has to be taken seriously until it is broken and doesn’t work anymore.

And when combined with evidence of near-term exhaustion (DeMark analysis), overbought conditions, bearish seasonality and many stock market indices like the Nasdaq 100 up against upper edge of resistance, I expect September to have a bearish influence on stocks. And this could start as soon as next week.

That said, it’s very tough to make any sort of larger bearish call until at least some evidence of structural weakness. Investors would need to see a break of the August lows, along with an overbalance of time on this correction compared with the last four.

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Markets could very easily do the same thing we’ve seen since May and simply turn back up again for a push into October or November. Given the strength in healthcare and Financials, I’m unwilling to call for a break of 4367 and feel that until proven otherwise, it’s best to just buy dips down 3-5% and make the “bear” truly prove itself. However, for the next 2-3 weeks, I am expecting that making further progress above 4560 should prove difficult and one should prepare for a pullback down to 4400 or under.

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The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.