Be Prepared For A Global Stock Market Correction In The Second Half Of 2017

The Dow Jones Industrial Average, S&P 500 and the German DAX are the only three major averages around the globe to set new all-time intraday highs this week, and they did so on June 19 or June 20. All nine indexes have positive weekly charts. Overbought readings are noted on the Dow 30, S&P 500, the Nasdaq, the Nikkei 225, India’s Nifty 50 and the German DAX. Dow Transports, Russell 2000 and the Shanghai Composite have rising momentum readings.

Here’s This Week’s Scorecard 

India’s Nifty 50 still has the largest year-to-date gain of 17%, slipping from 17.1% on June 16. The Nasdaq has the largest U.S. gain, up 15.9% year-to-date as of June 22. On the weak side of the ledger, the transport average is the laggard in the U.S., up just 3.1. Overseas, China’s Shanghai Composite is the laggard, up just 1.7%.

The closes on June 30 are extremely important. As July begins my proprietary analytics will generate new weekly, monthly, quarterly and semiannual value levels, risky levels or pivots. The annual levels will remain the same as they are based on the close of 2016. In July, most averages will have a wall of risky levels not far away from where the first half ends.

Here Are The Weekly Charts From Around The World

The Dow Jones Industrial Average (21,397.29 on June 22) set an all-time intraday high of 21,535.03 on June 20, and has a positive but overbought weekly chart. Reduce holdings on strength to my monthly and annual risky levels of 21,987 and 22,041, respectively. My quarterly value level lags at 19,189.

The S&P 500 (2,434.15 on June 22) set an all-time intraday high of 2,453.82 on June 19, and has a positive but overbought weekly chart. Reduce holdings on strength to my monthly and annual risky levels of 2,448.8 and 2,537.9, respectively. Note that the monthly level has been tested as a warning. My quarterly value level lags at 2,225.2.

The Nasdaq Composite (6,236.69 on June 22) set an all-time intraday high of 6,341.70 on June, and has a positive but overbought weekly chart. The high was just shy of my semiannual risky level of 6,387, but below my annual pivot of 6,253 is now a magnet for the remainder of 2017, which should be a stock market drag. My monthly pivot is 6,164.

The Dow Jones Transportation Average (9,319.84 on June 22) set its all-time intraday high of 9.639.33 on March 1, and has a positive weekly chart. There is a wide range between my annual value level of 7,910 and my annual risky level of 10,167. These will tighten up in July.

The Russell 2000 (1,404.54 on June 22) set its all-time intraday high of 1,433.01 on June 9, and has a positive weekly chart. It came close to my monthly risky level of 1,447.49. My quarterly value level is 1,222.14 with my annual risky level of 1,548.95.

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The Nikkei 225 (20,132.67 on June 23) remains shy of its June 24, 2015 multiyear intraday high of 20,952.71 by 3.9%. Its 2017 high is 20,318.11, set on June 20. The weekly chart remains positive but overbought. My annual pivot of 20,169.42 will remain a drag or magnet for the remainder of 2017.

The Shanghai Composite (3,157.43 on June 23) remains deep in bear market territory, 39% below its June 12, 2015 multiyear high of 5,178.19. Its 2017 high is 3,295.19 set on April 7, below its Nov. 29 high of 3,301.21. The weekly chart ended this week positive, with the Chinese benchmark well below its annual risky level of 3,879.39.

The Nifty 50 (9,574.95 on June 23) set an all-time intraday high of 9,709.30 on June 6, and ended the week with a positive but overbought weekly chart. My annual risky level is 10,545.21.

The Deutsche Boerse DAX Index (12,733.41 on June 23) set an all-time intraday high of 12,951.54 on June 20, and ended the week with a positive but overbought weekly chart. My annual pivot of 12,844.29 will be a drag or magnet for the remainder of 2017.