Thursday, July 30, 2015

SPX S&P 500 Monthly Chart

The SPX monthly chart continues to forecast a multi-year top at hand a la 2007. The red lines show the negative divergence that creates downside pressure. The bears need the indicators to start printing lower lows to start a strong downside move. The MACD line is trying to print a lower low. The red rising wedge pattern is very ominous since the collapses from rising wedges can be quite dramatic. Price is extended above its moving averages requiring a mean reversion. There is also negative divergence in play comparing the 2007 top to the current top.

July ends tomorrow and the month began at 2063. Price is at 2109 about 46 points above as the white candlestick shows with an up month on tap. The market bears would need to begin pounding markets lower today to make a run at 2063 and a negative month. The potential positive month with highs near all-time record highs, however, is not as rosy as in the past since the chart indicators no longer have any oomph and are not printing higher highs.

The chart is consistent with a multi-year top. This would jive with the 18-year cycle that is in a secular bear from 2000 to 2018. Keep in mind that sharp strong rallies are very common in secular bear markets such as the 2003-2007 rally and the current 2009-2015 rally. It would not be surprising to see the bears growl into 2018 and the stock market down three of the next four years.

The Dow monthly chart is the same set up only slightly more negative since the money flow, stochastics and MACD line are all printing lower lows trying to drag price lower. The Nasdaq monthly chart has been the most bullish maintaining a sliver of long and strong strength in the MACD line. That is why Keystone had said you have to continue to be patient for the market top a couple three months ago. The COMPQ came up and prints new all-time record highs this month, however, all the indicators, including the MACD line are now in negative divergence. So tech is now indicating a multi-year top and flattening and rolling over to the downside would be expected going forward. Watch the leaders such as AAPL, NFLX, FB and AMZN that are single-handedly sending stocks higher--never a good sign for markets.

The forecast is that markets are or have peaked out with a multi-year top and lower prices are expected for the stock market for the weeks, months and perhaps a couple years ahead. 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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