Monday, April 18, 2016
Major Indexes Moving into Cyclical Bull Market Patterns with 150-Day MA's Sloping Higher
Keystone warned that a cyclical bear market had begun for stocks in August of last year. That is when the 150-day MA slope turned negative. It is a very useful signal for all of your stock trades. If you are long a stock or index, you want the 150-day MA sloping upwards; if is not, your trade is in serious trouble. Conversely, if you are short a trade, you want that ticker to display a negatively-sloping 150 to prove your path is correct; if the 150-day is sloping higher and you are short you are in trouble.
There are four major indexes you want to monitor. Of course the big kahuna, the S&P 500, the SPX, is the key broad market index. Professional traders use the SPX as the key index. The Dow Industrials, INDU, DJI, the Dirty Thirty, are 30 blue chip, dividend, multi-national stocks, the big boys on the block. The Dow is what the general public follows and historic data decades back pertains to the Dow. The COMPQ is the Nasdaq Composite which provides insight into tech, biotech and high-flying stocks. The RUT is the Russell 2000 that provides insight into the small caps.
The SPX, INDU and COMPQ charts show that the 150-day moving average's are sloping higher beginning over the last two or three weeks sending stocks into a cyclical bull market pattern. This is a strong punch in the bear's face. The small caps are the last hold-out that will either confirm the bullish upside joy, or, instead cause the other three indexes to reverse and turn negative again. The RUT moves above its 200-day MA today a big victory for bulls and slap to the bear's face. The Russell price is above the 150-day so by definition this will curl the 150 higher. Bears need to send the RUT lower pronto.
Note that pesky RUT 150-day MA. It is not sloping higher yet. The cyclical (weeks and months) bear market remains in play for small caps ever since late last summer. Monitor the 150-day MA slope for the RUT going forward as well as the fight at the 200-day MA. Each day that the RUT stays above the 200-day is another nail in the bear's coffin. The RUT 150-day MA slope will either confirm that the stock market negativity selling will resume, as it does now, or, the 150 will flatten out and then slope higher to prove that the overall stock market has turned around and is now in a full-fledged bull market pattern.
If you are a longer term trader, you need to follow the 150-day MA slopes for the SPX, INDU, COMPQ and RUT, the UPS 20/50-week MA cross, the SPX 12-month MA cross and the NYA 40-week MA cross to figure out the cyclical market path ahead. All seven indicators are charted this evening so scroll back to review the charts or type the ticker symbol into the search box at the right to bring up the chart.
The SPX, INDU and COMPQ 150-day MA's are sloping higher, the SPX is above the 12-month MA and the NYA is above the 40-week MA all cyclical bull market signals. The RUT 150-day MA is sloping negatively and the UPS 20/50 cross is negative maintaining cyclical bear market signals. When all seven of these signals are in the same camp, you will be completely sure that stocks have chosen that direction forward for the weeks and months to come. 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.