Thursday, October 2, 2014

NYA NYSE Composite Weekly Chart 40-Week MA Cross Failure Ushers in Cyclical Bear Market

As the Apollo astronauts said decades ago, "Houston, we have a problem." The NYA fell through the 40-week MA ending the cyclical bull market and ushering in a cyclical bear market. The last time that the NYA was below the 40-week MA was during the 2012 economic and market malaise and the breach of the 40-week MA in late July early August 2011 ushered in the waterfall market crash.

The NYA 40-week MA cross is a key Keystone cyclical market signal as many of you long time readers will remember. The last significant drama was late 2012 when the 40-week MA failure occurred but the cross turned positive to begin 2013 and sure enough the historic upside rally occurs over the last nearly two years. There's a tease in late June 2013, then another at the start of this year, only for the NYA to bounce off the 40-week MA and recover as central bankers continue to pump markets higher with easy money. The stock market is not permitted to correct by the central bankers.

Note the double top, or M Top, pattern for the chart. The rising wedge patterns are ominous since the collapses can be quite dramatic. Price fell out of the red rising wedge, then came up for a back test of the lower trend line of the wedge, and failed, collapsing to and through the 40-week MA at 10628; very bearish price action. The red lines show the negative divergence that predicted the spank downs off the two peaks. The indicators remain weak and bleak so lower prices would be expected after any bounce occurs in this weekly time frame. Of course, if ECB President Draghi fires a money bazooka this morning at the monthly meeting or if the Fed or other central bankers promise more money-printing, the NYA will recover. The markets have been controlled by the central banks ever since the 2008-2009 financial crisis. The chart indicates that an end game may be at hand exposing the obscenity.

Watch the 40-week MA at 10630-ish going forward as a major market directional signal. The bears are going to create mayhem in markets if price stays under the 40-week MA and the selling pressure may continue for weeks, months even a year or two. If you are bullish and buy into the near universal consensus that the current market sell off is a buying opportunity for higher markets ahead, use the 40-week MA as your guide. If the NYA recovers back above the 40-week, you can rejoice if bullish since markets will recover, and the fix will be in. If the NYA stays under the 40-week MA, and you are a bull, you are going to get slaughtered. 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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