Troublesome Index Patterns

By Investor’s Yak

When the market sets up for failure during a late summer slowdown, it could be a hint to stay away.
See the charts for yourself.

Here are the three things you need to know:

1. Major Market Indices are setting up troublesome looking patterns:

  • DJIA is priced below its 50 and 200 day moving average (DMA), with the 50 crossing below the 200 (a big Danger sign).
  • IWM (Small Cap) is also priced below its 50 and 200 DMA.
  • S&P500 is below the 50 DMA and resting on the 200 DMA.
  • NASDAQ is below the 50 DMA and at price support. It is the strongest of the indices.

2. Action Zones for above Major Markets

  • Daily charts show a near term setup for a bounce to higher prices.
  • Week charts indicate a longer term push in the negative price direction.

3. Other Sectors

  • Healthcare and Pharmaceuticals appear to be topping out and the Biotechnologies have already busted below the 50 DMA.
  • Financials, while in a trading range, the weekly Action Zones show the possibility of topping.
  • Homebuilders are in a trading range
  • Utilities may bounce but will most likely find resistance at the 200 DMA.
  • Almost every other Sector is showing signs of trouble (Semiconductors, Technology, Materials, Retail, and Transportation).
  • Energy and Metals (gold, silver, platinum, etc.) have been beaten down for months.

Event calendar affecting markets this month
20 August – Greece ECB bond payment due
28-31 August – Window Dressing

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