January 07, 2025: Market weakness is building

As 2025 unfolds, market analysts are almost uniformly predicting new all-times highs. A bull market that has risen for 16 years should should carry-on for a few more years, many have said. It is a challenge to read any market articles that do not talk about a very profitable bull market in 2025.
It is a pity that the market is not listening (Charts 1 & 2).

US markets (Dow, S&P 500 and NYSE) are all forming, what appears to be, a multi-month top.

What is not known is whether this crest is short-term (several months) or a start of a deeper and more prolonged correction.

The pattern that is developing is a bearish Head & Shoulders formation. The pattern is not complete until the indexes break down through their support level.

Adding to the expected outlook is the trading pattern of the MS World (ex-USA) Index.

This global equity index (Chart 3) has retracted every time it has reached to top line. The average correction is about 25% and the duration until the index reaches the bottom line is one to two years.

Bottom line: US markets are slowly pulling back. After reaching new all-time highs in early December, they are all forming what appears to be a bearish Head & Shoulders Pattern. A break below 42,000 for the Dow, 5832 for the SPX and 18,790 for the NYSE is still needed to complete the bearish pattern.

We anticipate this action to occur by late January.