Market tops and reversals tend to occur just before, during, or just after a holiday week.

Will this market be any different?

Empirical data collected over the years (linked here) shows a tendency of the markets to reverse during holidays.

The most famous reversal was September 3^rd, 1929.  That was the day after the Labor Day Weekend.

Yesterday, the Dow 30, made a new all time high. Looking at the chart (expandable version here), it’s in a very narrow range and hitting the underside of a long-term trend line.

This is a low risk area. A DXD (2X inverse fund) push past 13.22, could be considered an entry signal; stop at DXD 12.96 (not advice, not a recommendation).

There’s bound to be a lot of chop if and when this market reverses; the firm is leaving this one alone … for now.

Reversal chop was clearly seen on the GDX.  It banged around for months before getting into position for a decisive move lower.

Trading inverse funds (for best profit) requires a steady, sustained directional move. 

Those moves typically do not appear right at a reversal transition.

If this is it … if this week is the high and reversal for the S&P, Dow and NASDAQ, then it’s likely the market will chop and set up conditions before a sustained move lower.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.