In my video update on Friday, I outlined three strong support levels for the broad markets. For the S&P 500, the support was 2,430. For the Dow is was 22,275. And for the Nasdaq it was 6,300.

I based these on logarithmic (exponential for tracking bubbles) channels.

The S&P 500 broke that support on Friday. The other two indices accelerated their decline and broke their respective supports on Christmas Eve.

That was NOT a good sign, despite the rally today.

The Nasdaq and Dow channels only broke slightly below those support levels, certainly not enough to disqualify them…

But the S&P 500 broke down a bit more critically… Yet the markets are finally rallying more strongly today!

This brings us to the middle of both potentially EXTREME scenarios I’m monitoring: 

Either the markets are going to blow-off big time into 2019 after this deeper correction… 

Or, they’re going to continue to crash into 2021 or later, with more to come near term. 

Unfortunately, right now it could still go either way…

The experts on Wall Street are expecting neither of these two scenarios. They think the markets will be up modestly in 2019 after this correction.

But I still lean towards the “pause-that-refreshes” scenario. That is, a deep correction that ends up in a strong, final blow-off rally into late 2019. History would favor this scenario when a major bubble is peaking.

Here’s the important support just ahead at around 2,300 on the S&P 500…

 

This is the linear channel for the S&P 500, with a classic overthrow top above the channel.

A break much below 2,300 on the S&P 500 would confirm this pattern and be the first signal that markets put in the top in late September, even though the previous January top looked more like a major bubble peak. That would mean stocks could accelerate downward again occurring just a bit later than in past initial bubble crashes.

However, the markets are still at a critical point. The stronger rally today could signal a potential bottom and the rally scenario for 2019… but we’ll see ahead.

We’ll keep you updated. But for now, stick to your chosen strategy, which should have an escape valve and a protection plan against a downturn. Each member of our team – Rodney Johnson, Lance Gaitan, John Del Vecchio, and Adam O’Dell – is watching this situation closely, and sending out alerts as and when necessary. Watch out for their emails and follow their guidance. This isn’t their first rodeo.

Harry
Follow me on Twitter @harrydentjr

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Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.