The Bottom Line on the Market

By | August 16, 2015

The March/May zones that have supported the horizontal consolidations on the S&P 500 index and the NASDAQ Composite charts remain intact, but support on the DJIA chart has failed and a breakdown on the Russell 2000 chart may not be far behind.
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The weekly charts show the Dow penetration with the 50 day moving average crossing below the 200 day average, and the Russell forming a narrow opening and closing range “doji” candle right on its former 2014 resistance and current 2015 support level.
On closer examination, however, there are issues with the S&P 500 and the Naz charts as well, for instance, the number of stocks above their 50 day moving averages continues to track lower, and the volume that accompanied Friday’s modest strength was light, about 21% below the 50 day moving average of volume on the S&P chart and 19% on the NASDAQ chart.
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The bottom line though is not the March/May lows, it is the fact that a series of lower highs and lower lows continue to form on the major market index charts. Regardless of where we try to presume support should be, the pattern is clear and the dynamic is bearish.
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