Saturday, August 30, 2014

INDU Dow Industrials Monthly Chart Overbot Rising Wedge Negative Divergence Price Extended

The prior SPX monthly chart shows a long and strong MACD line for the last few months that will want to see another high for the SPX price after a pullback occurs. The COMPQ (Nasdaq) monthly chart is set up the same as the SPX. The RUT monthly chart has already rolled over and received the spank down off the top with its negative divergence. Interestingly, the Dow chart above has now locked in universal neggie d across all indicators after the new all-time intraday high printed at 17153.80 last Tuesday. The MACD is negatively diverged so the Dow has ran out of gas.

The RSI may sneak up into overbot territory again if the SPX and COMPQ keep goosing equities higher but the RSI should remain negatively diverged compared to the December 2013 high and the 2007 top. Ditto the money flow. What does all this mumbo-jumbo mean? The Dow should roll over from here and it is likely that the Dow has printed a multi-year top or will in the days ahead. The pink dots show what happens when price becomes overextended above the moving averages; a mean reversion. The red rising wedge is extremely ominous since the failures from rising wedges can be quite dramatic.

The projection is for the Dow to receive the negative divergence spank down in September. After equities sell off and a bounce occurs, the SPX and COMPQ should come back up to the current levels for one last look, however, the Dow has no interest in printing any further higher highs in price. THE top may be in for the Dow which follows THE top in the RUT placed in July with the intramonth high and bearish engulfing monthly candlestick. So the Russell 2000 small caps rolled over first, Dow should be next then the SPX and Nasdaq. The chart forecasts the Dow to roll over moving forward for the weeks, months and potentially year or two ahead. These are monthly charts so give or take a few weeks but a prudent call is that equities are printing a multi-year top with all indexes likely peaking and rolling over within the coming weeks. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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