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Dow Jones: Seasonality Targets Important Low Later This Month

By Dr. Arnout ter Schure Stock MarketsJun 16, 2021 04:44PM ET
www.investing.com/analysis/dow-jones-seasonality-targets-important-low-later-this-month-200586569
Dow Jones: Seasonality Targets Important Low Later This Month
By Dr. Arnout ter Schure   |  Jun 16, 2021 04:44PM ET
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Using data since 1900, one can construct “seasonal average” patterns for each four-year presidential election cycle. As 2021 is a post-election year and, despite all the FED’s “it is not quantitative easing” $100 billion per month, the Dow Jones Industrial Average has followed the average seasonal average pattern rather well. See Figure 1 below.

It makes me wonder what is driving markets? The Y-axis shows the average percentage change. But what matters more is the timing of the highs and lows.

Figure 1. Dow Jones Average Post-Election Year pattern and daily YTD chart

Dow Jones Daily Chart.
Dow Jones Daily Chart.

It follows that not all highs and lows exactly match in time. (See blue arrows.)

Still, the differences are minimal. And remember, we are talking about an average pattern of 20 elections, not about absolutes. Therefore, the bottom line is to expect a significant low some time next week before the next rally commences that takes the index to new all-time highs into early July.

After that high, we should – assuming the current market continues to follow the average pattern as it has and there is currently nothing to suggest it will not – expect a multi-month correction. Albeit, not shown here, but from an Elliott Wave Principle (EWP) perspective, I expect the pending low to be a smaller degree (intermediate) 4th wave; the rally into July the last 5th wave of a more significant (major) 3rd wave, and the correction into the fall should be major-4, with a major-5 to follow into 2022. That should then complete the bull market that started in March 2020.

Dow Jones: Seasonality Targets Important Low Later This Month
 

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Dow Jones: Seasonality Targets Important Low Later This Month

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Comments (6)
Andrew Bevan
Andrew Bevan Jun 17, 2021 9:01AM ET
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Well, the Dow looks weak here with a top on June 7. lower than the top May 10. (28 days). A further drop (3%) to 32800 may be extended to 31920 (6%) or 31700 (6,5%) for evaluation.  If we're looking for a date in late June, maybe June 21. (14days) or June 24. (28x.618) should be on the watchlist.
Miguel Massens
Miguel Massens Jun 17, 2021 1:17AM ET
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162390700585665.jpg
3-4% drop likely, support at March trend line and 100day avg.
Franc Fil
Franc Fil Jun 17, 2021 1:10AM ET
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market crash
Steve Dyer
WaveRunner Jun 16, 2021 9:24PM ET
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It would have been so much more interesting if they had used a line graph comparison on the current year instead of a candle chart.
Miguel Massens
Miguel Massens Jun 16, 2021 8:34PM ET
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target for September/Oct low? 30,000? I'm thinking 36k here in July.
Gordan Flego
Gordan Flego Jun 16, 2021 5:01PM ET
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Hello. New matter to study. So you think that bull market will lasts 8-10 months more?
 
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