New Record High

25 October 2021 By PDSNET

As we predicted, the S&P500 reached a new all-time record high on Thursday 21st October 2021 at 4549.78. This officially means that the correction that it was going through is over. That correction took the index down to a closing low of 4300.46 (on 4th October 2021) – which is a 5,2% decline from the cycle high of 4536.95 made on the 2nd of September 2021.

In the end, this turned out to be yet another “mini-correction”  of less than 10% - the 10th since the COVID-19 V-bottom last year. This means that the major correction, of between 10% and 20%, which we have been talking about, is still coming.

What was notable about this correction, when compared to previous mini-corrections, was the duration of the downward trend and the sharpness of the recovery. It took 21 trading days to reach its low – which means that the bears really intended to take the market further down. They were strongly opposed by significant bullish sentiment which was evident in the “buy the dips” rhetoric and so prevented the correction from gaining any momentum. Then, when it became obvious that the bears were losing direction, the recovery was rapid – taking just 6 trading days to reach new record territory.

The bulls clearly took heart from the fact that the potentially dangerous month of October was substantially behind them, and the traditional Christmas rally was imminent. Consider the chart:

S&P500 Index - 9 August 2021 - 22 October 2021. Chart by ShareFriend Pro

The last three days on the chart above were characterized by backing and filling as the index struggled to rise above the previous cycle high of 4536.95. The final day on the chart above was last Friday (22-10-21) which was characterized by a “long-legged dojicandle where the S&P went well above and below its opening but ended up just slightly down on the day: Consider the market action of Friday 22nd October 2021:

S&P500 Index: Intraday Chart - 22 October 2021. Sourced from:

Google Finance

The intraday market action for Friday shows that there is still considerable uncertainty in the market about the new record closing high. You can see how the index, having made an all-time intra-day record high (4559.67), made a low of 4524 and then struggled to remain close to the previous day’s record closing high. The danger, of course, is that the new record high close could turn into a “double top” – which is a bearish formation. Technical analysts all over the world are now waiting to see if the upside break can be sustained and extended – or if the bearish sentiment will return to take the index down again, thus forming a double top.

You might wonder why we are so preoccupied with the minutiae of the S&P’s progress. The reason is that the stock markets of the world, including the JSE, tend to follow the S&P – so it is always your best indication of what is likely to happen. As a private investor, you need to always be watching the S&P to see where world markets are and where they are going. The direction of the S&P will establish whether you are looking at a bull trend or a bear trend. It will give you an indication of whether this just a correction and therefore a buying opportunity, or the start of a new bear trend, which would mean that you should be out of the market completely.

Our view is, and always has been, that we are in a mature primary bull trend, which is being peppered by mini-corrections (of less than 10%), but that we are over-due for a major correction of between 10% and 20% - which now seems unlikely to happen before next year.  


All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

Share this article:


The Anatomy of the Bear

As the bear market unfolds on Wall Street you either hold shares or you are sitting in cash. For those who are holding shares, as we have said consistently, you need to watch your stop-loss levels very closely because you are operating in a market where the odds are decidedly against you.

For those in cash, your position is

Bear Trend

We never regarded the COVID-19 fall of the S&P500 in March 2020 as a bear trend. In our view it was always a technical aberration caused by the “black swan” event of the pandemic. It caused a temporary downward spike which lasted from February to August 2020, but it was never a true bear market.

Then on Monday

Uncharted Territory

The world has entered a turbulent time, the outcome of which will largely determine the future order of things. There are six great areas of uncertainty which the private investor should formulate a coherent opinion on:


  • The war in Ukraine is in reality the remnants of the cold war, a low-level conflict

Triple bottoms

Investors should be riveted to the progress of the S&P500 index these days. As we said in our article three weeks ago, the S&P is teetering on the edge of a bear trend. Following that article, the index climbed back up and then on the US Memorial Day weekend it encountered significant

Basic Fundamentals

Public, listed companies are required to report back to their shareholders on a regular basis. They must produce audited financial statements after the first six months of their financial year (interims) and then again at the end of the financial year (finals). Listed companies must produce these statements within 3 months of the end of their

Teetering on the Edge

Last Friday, the S&P500 actually dipped into bear market territory during the trading day. It went as low as 3811.28 before staging a remarkable recovery in afternoon trade to close at 3901.36. This resulted in Friday’s candle becoming what is known as a “hammer” – a candle with a very short body and a long downward

Bitcoin versus Gold

Cryptocurrencies cannot really be considered an investment because they have no fundamentals. Their value is derived exclusively from the belief of the people who invest in them. When belief in Bitcoin is strong the price rises and when it is weak, the price falls.

Bitcoin cannot be regarded as a “safe haven” asset


Most investors would probably agree that there is a considerable amount of uncertainty in equity markets at the moment. From a fundamental perspective, that uncertainty has come about because of:

  1. The force with which the central banks of the world (especially the US Fed) will “stamp on the brakes” to reduce

Powells Punch

In November last year we wrote the following about the U.S. economy in the Confidential Report:

…what if the Fed is wrong about inflation and it persists at the current high levels or even increases? September was the 5th month where inflation was above 5%. If they are wrong, then they will need to raise interest


Nineteen months ago on 2nd of September 2020 in the Confidential Report, we recommended buying Lewis shares when they were trading for just 1668c. The share has now moved up to 4670c – a gain of 180%. Amazingly, it remains excellent value today despite this substantial rise in its price.

The company has 817 stores with 84%