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Thursday, January 17, 2019 9:21:34 AM
DP Alert: Short-Term Indicators and Mature Rising Wedge Suggest a Downturn
By: Erin Swenlin | January 16, 2019
Right now, our short-term indicators (and even our climactic ones) are suggesting decline. The rising wedge formation on the SPX is quite bearish, but I also see it as being "mature." This means that price is getting very close to the apex of the wedge. I'll explain more in the section on stocks below. The DP Scoreboards are short-term positive as far as price trend and momentum, but our DP short-term indicators are far from bullish.
SECTORS
Each S&P 500 Index component stock is assigned to one (and only one) of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
STOCKS
SPY - IT Trend Model: Neutral as of 10/15/2018
SPY - LT Trend Model: SELL as of 12/14/2018
SPX Daily Chart: To expand on the "mature" pattern definition, Thomas Bulkowski nullifies patterns that get more than 2/3 in to the apex. We should see the breakdown soon. If not, the pattern will lose validity. If price snuggles up in the apex, any type of consolidation or sideways move would technically be a break below the rising bottoms trend line. I don't have confidence in a "breakdown" that occurs on a drift sideways. I could see a rally continuing to the intermediate-term declining tops line, if it can first break above the November low. Price closed near the lows today, which, in general, is a sign of a reversal.
Climactic Market Indicators: Looking at the direction of breadth and price, we have a pretty strong negative divergence. The VIX has yet to reach the upper Bollinger Band, but we've seen price drops occur before that happens. Note that, despite a very strong rally off of the December low, no New Highs have been set. Part of the reason is for that is that they hit deep lows and are having to take some time to move high enough.
Short-Term Market Indicators: These are still overbought and declining. I would expect to see that new down leg very soon (perhaps by Friday?).
Intermediate-Term Market Indicators: These are rising bullishly and have now exited oversold territory. The bullish move of these readings is likely finishing; now is the time to watch for deceleration. Reaching positive territory is bullish, though, so we can't ignore that.
Conclusion: Price closed on the lows today and short-term indicators are suggesting a decline. I favor a failure and an execution of the bearish rising wedge.
Read Full Story »»»
• DiscoverGold
By: Erin Swenlin | January 16, 2019
Right now, our short-term indicators (and even our climactic ones) are suggesting decline. The rising wedge formation on the SPX is quite bearish, but I also see it as being "mature." This means that price is getting very close to the apex of the wedge. I'll explain more in the section on stocks below. The DP Scoreboards are short-term positive as far as price trend and momentum, but our DP short-term indicators are far from bullish.
SECTORS
Each S&P 500 Index component stock is assigned to one (and only one) of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
STOCKS
SPY - IT Trend Model: Neutral as of 10/15/2018
SPY - LT Trend Model: SELL as of 12/14/2018
SPX Daily Chart: To expand on the "mature" pattern definition, Thomas Bulkowski nullifies patterns that get more than 2/3 in to the apex. We should see the breakdown soon. If not, the pattern will lose validity. If price snuggles up in the apex, any type of consolidation or sideways move would technically be a break below the rising bottoms trend line. I don't have confidence in a "breakdown" that occurs on a drift sideways. I could see a rally continuing to the intermediate-term declining tops line, if it can first break above the November low. Price closed near the lows today, which, in general, is a sign of a reversal.
Climactic Market Indicators: Looking at the direction of breadth and price, we have a pretty strong negative divergence. The VIX has yet to reach the upper Bollinger Band, but we've seen price drops occur before that happens. Note that, despite a very strong rally off of the December low, no New Highs have been set. Part of the reason is for that is that they hit deep lows and are having to take some time to move high enough.
Short-Term Market Indicators: These are still overbought and declining. I would expect to see that new down leg very soon (perhaps by Friday?).
Intermediate-Term Market Indicators: These are rising bullishly and have now exited oversold territory. The bullish move of these readings is likely finishing; now is the time to watch for deceleration. Reaching positive territory is bullish, though, so we can't ignore that.
Conclusion: Price closed on the lows today and short-term indicators are suggesting a decline. I favor a failure and an execution of the bearish rising wedge.
Read Full Story »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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