AI
Saturday, January 30, 2010 7:13:27 AM
Re: Dow Jones US Financial Index vs. SPX:
When measured against SPX, the financials have not faired very well since early 2007.
In the relative strength chart below, wherein the Financial Index is expressed in relative strength against SPX, the shear decline in the financials represents a strong bearish move that preceded any recessionary alarms. In fact, one could say that the financials have underperformed the SPX for more than half of the past decade.
The abyssmal decline stopped and prices rallied as of last MARCH 2009 - the point at which the world markets speculated about the possibility of a sustained rally into a bullish blue azur sky ... but, the clouds have since moved in and the forecast is grimmer as of this past week.
Technically, the rally that lifted most stocks since MARCH 2009 represents a SHALLOW retracement, whereby this relative strength chart keeps the value within the 23.6 and 38.2% Fibonacci ranges. Considering the dominant downtrend and overhead resistance at the 0.26 relative strength value, here intuition favors the bears.
Of note, the positive divergence that formed in RSI may have reached the end of its technical utility as more resistance signals are emerging in this leading indicator. In fact, RSI seems to struggle to cross over the psychological 50-line - indicating a ratio of buyers and sellers uncommitted towards any further rally.
Look for the 89-WEEKLY EMA for breakout, as this Fibonacci-valued EMA may provide the first inkling whether a further rally is a fathomable scenario in this growingly bearish environment.
Have a great week-end.
- Dalcindo
PS: More indices and charting analysis here: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281 .
- Dalcindo
When measured against SPX, the financials have not faired very well since early 2007.
In the relative strength chart below, wherein the Financial Index is expressed in relative strength against SPX, the shear decline in the financials represents a strong bearish move that preceded any recessionary alarms. In fact, one could say that the financials have underperformed the SPX for more than half of the past decade.
The abyssmal decline stopped and prices rallied as of last MARCH 2009 - the point at which the world markets speculated about the possibility of a sustained rally into a bullish blue azur sky ... but, the clouds have since moved in and the forecast is grimmer as of this past week.
Technically, the rally that lifted most stocks since MARCH 2009 represents a SHALLOW retracement, whereby this relative strength chart keeps the value within the 23.6 and 38.2% Fibonacci ranges. Considering the dominant downtrend and overhead resistance at the 0.26 relative strength value, here intuition favors the bears.
Of note, the positive divergence that formed in RSI may have reached the end of its technical utility as more resistance signals are emerging in this leading indicator. In fact, RSI seems to struggle to cross over the psychological 50-line - indicating a ratio of buyers and sellers uncommitted towards any further rally.
Look for the 89-WEEKLY EMA for breakout, as this Fibonacci-valued EMA may provide the first inkling whether a further rally is a fathomable scenario in this growingly bearish environment.
Have a great week-end.
- Dalcindo
PS: More indices and charting analysis here: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281 .
- Dalcindo
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