Super quick post today, but thought you’d want to see this. In a nutshell: the daily chart of the SPX (and other NA charts) suggests a HIGH probability of a pullback coming soon to a theatre near you. It is no surprise to see technical sell indicators right at the 4100-4200 technical resistance point on the charts.
Note – we’ve seen peaking activity followed by negative action every time there’s been a cross-the-board lining up of:
- Stochastics hooking down
- RSI rolling over
- Chalkin Moneyflow momentum overbought
- Most important: MACD bearish cross after an entire month of declining momentum (see the blue histogram bars on the MACD indictor, bottom pane).
Despite the maintenance of the SPX over its 50 and 200 SMA’s (suggesting mid-termed trend is still OK), the very neartermed signals are rather bearish. We may only see a neartermed pullback, perhaps to about 3800-3900 (recent neartermed support zone). Or more. Who knows? Whatever the case: The technical’s suggest holding off on adding to new equity positions for a bit, no matter how bullish you are. Let the market tell you when things are bullish again. Look for reversals in the daily chart indicators noted above. As noted above, this is just a quick n/ dirty update – one that I thought was important enough for you to see. Hope it helps.
3 Comments
For most investors, should the Russel 1000, 2000 or 3000 not be a better reference as to market bullish or bearish trends than the S&P? YeTs ago, news casts relied on the Dow Jones index for perception of market status. no longer today. The S&P is too heavily influenced by FANGLE and Tesla. etc.
Intelligent question, thankyou. Yes, I look at a more widely distributed (less concentrated) index –more specifically when looking at breadth. The NYSE index holds about 2800 stocks vs a little over 500 for the SPX. The index is still cap weighted but there is a somewhat more balanced distribution of influence vs the SPX – per your point. I look at breadth (in a few ways) within my Bear-o-meter. Some of the breadth indicators I use are tied to the NYSE as it gives us a really nice picture of the true market internals vs the SPX. Still- I chart the SPX as the benchmark because the stocks that are weighted highly (tech, healthcare, consumer disc) are in fact weighted that way because investors heavily own them. So we need to see what “the market” is doing aka what people own, vs. the broader picture, aka breadth.
Case in point: If we compare the NYSE vs the SPX, you see that the SPX is at resistance (4100-4200) — then look at the NYSE, which is NOT at technical resistance (about 15,800-ish). The NYSE sits near 15,400. –go back to my last Bear-o-meter comment early April and you will see that I commented on the discrepancy of breadth. It is a concern.
Hope that helps
Thanksfor your knowledge.Too many investors pray on the altar of tech stocks, many that do not pay a dividend, as the FANGLE. Elon Musk in taking over Twitter, demonstrated with the hundreds of millions of USD of cuts in waste, that it should have gone back to investors, i.e.stock owners in the form of dividends,versus comfort expenses by idle staff. We need to support Canada’s commodities producers,not tech companies promising pipe dreams.