The S&P 500 was up a measly .18 points and not even worth a % point. As measly as it looks, the beginning of the week we almost hit 1200 when we reached the weekly high of 1196.12. Everyday after Monday we floated down or sideways. So is this the top? It got me thinking, so I did a little comparison in charts only on the dailies to give us or me a clue.
The Dow 30, which I really do not put much weight in, but every newscaster in the world loves to talk about and put the fear of God in everyone, is looking a little weak. The last three trading days were Red and trailing in a downward fashion. If you have two red flags in a row and the 8 day ma flattens out or starts to nose over, it is the first sign that the trend is over and a new downtrend is about to begin. Since the Dow is only 30 stocks and there is no way 30 stocks can really give you an indication of what the market is doing, so what are the other markets saying? So what I did is go back to the beginning of the year and look at every major trend reversal and compared them all together to see if they were in sink.
January 20-21, a new down trend started. The Dow, S&P500, Nasdaq, and Small Cap all nosed over together. pretty good sign
April 30-May2, The S&P, Nasdaq, and Small Cap all lead the way down and then the Dow followed. Hmm.
June 22-24, All four markets agreed and all nosed over starting a new down trend. Pretty good indicator.
August 9-11, All four markets agreed and all nosed over starting a new down trend. Pretty good indicator.
So going back to the original Dow 30 paragraph above, the Dow is looking very concerning, but what about the other markets. The S&P is looking to be flatting out, but no red flags yet. The RSI is in a down trend and the MACD crossed over to the negative. But these are just warnings to be aware of, no reversal yet. The Nasdaq is just absolutely on fire and the only negative thing I can say is that it is over bought and might pull back a bit. The Small Cap not quite as strong as the Nasdaq only because the MACD did a negative crossover and is nosing down, but way to early to call a reversal.
Conclusion? None of the three of markets agree with the Dow at this time and I would put much more weight in the other three before I would give the Dow the time of day. So be aware that part of the market is throwing out warning signs and be aware that the current uptrend has been running since September 1 and is due for a pullback. Market reversal? I do not see it yet.
Industrial Groups:
XLY and XLK hottest
XLP and XLB still climbing
XLE, XLV nosing over
XLF flat and a waste of time to invest in.
XLI nosing over with 4 red flags. Everything is indicating a reversal this group.
XLU almost has given all signs of trend reversal and is heading down. A 8 day 21 day crossover is about happen. Stay away.
TSP distribution: C-fund 35%, S-fund 35%, G-fund 30%
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