chart: Back to the Average Election Years

Courtesy of chartoftheday.com

The DJIA is down 1.5% and the DJT is down 3.5% at the time of the writing.
So far the YTD DJIA is down 6.7% into mid January.  Sentiment is bearish, a contrarian indicator.  Indicators/Oscillators are over sold and in buy areas.  So what is going on?   Why does the market keep going down?
One reason is momentum and the fact that bull markets last longer than bear markets so we experience bull markets for a longer period of time than we experience bear markets.   At the beginning of a bull market there is momentum, a thrust, and as the bull gets under way the momentum starts to fade.  Sometimes indicators/oscillators will generate sell signals, but, they will  not even work and the bull just keeps going up.  
That might just be what is happening now, in reverse.  Maybe we are in a bear market?

The buying pressure has been showing positive divergence and the market keeps going down.  What is probably happening is that the patten developing is not a short term pattern but a larger pattern that will take much more time to complete.  If you take a close look at the buying presure chart you will see that this has happened before.

Short term cycles also have not been able to forecast turn dates and market direction recently as well as it had in the past.  Dec 29th was the last cycle high that was forecast well.  Then the short term cycle low of Jan 3rd was off by one day when the DJIA had a low on Jan 4th.  But then, the market kept falling.  Short term cycles are pointing down from Jan 13-14 into Jan 18-20, so let's see if the short term cycles get back on track again.

The intermediate cycles have been looking for a market correction in the first half of 2016.   There is other information also suggesting a 2016 correction. 
1) The pattern of the Average Election Years, see chart at the top of this page.
2) The 7th year of a two term President.  2015 was the first time since 1939 that the DJIA was down in the 7th year of a Presidency.  The DJIA fell about 1/3 in 1940-1941.  Note that 1940 was also an election tear.
3) The final year of a two term Presidency.  In 5 of the last 6 times, the DJIA dropped and average of 13.9%.
4) No Santa rally this year.  Yale Hirsch said, " If Santa Claus should fail to call, bears may come to Broad and Wall".

So back to the chart for a moment.  The market does not go straight up or straight down.  Even in the chart above there were several changes in trend.  Be nimble and be careful.  The market always tries to shake out as many investors/ and traders as possible.  This is nothing new.

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This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  
Past performance is not indicative of future results