INDU, or DJI (Dow Jones Industrials), is set up similarly as the SPX and SOX but the Dow has not overtaken the price high from late January. Ditto the NYA (NYSE Composite).
The COMPQ, NDX and RUT indexes are nearing their long-term tops but are not yet fully negatively-diverged due to the long and strong MACD lines. With the Labor Day holiday behind us and the last four months of the year ahead, it is a good time to review these charts and surmise how the long-term top in the stock market may play out.
The SOX monthly chart above displays the higher high in price, on a monthly basis, as compared to the March record highs. The all-time high is 1464.61 on 3/13/18 and all-time closing high 1445.90 on 3/12/18. Note that all the chart indicators (RSI, MACD, histogram, stochastics and money flow) are negatively diverged as the monthly chart squeezes out new highs. The monthly charts use the data points from the last day of each month. This is why the chart above shows the higher highs in monthly closing prices.
The neggie d verifies that the fuel tank that drives prices higher is empty. The chips are now moving higher on fumes. The red rising wedge and overbot RSI and stochastics are also bearish indications. Price is also extended above its moving average ribbon requiring a mean reversion lower. A chip is in nearly every product manufactured nowadays so a topping-out of semi's is a major negative development for the stock market.
The SOX has violated its upper standard deviation band since the beginning of the year so the middle band, also the 20-month MA, is on the table, at a minimum, at 1222 and rising. Price needs to show the middle band respect since 2016; it is about time it does. This level is 182 handles under the current price; about -13% below.
The chart signals that the long-term top (months and years) is in place for the chips like the May-June 2015 top. The May 2015 significant top, that Keystone called in early 2015, was also a long-term top, but the global central bankers colluded to stop the slide in early 2016 that created the Tweezer Bottom on the chart. Of course the central bankers will always implement policies that protect the wealthy privileged class that own large stock portfolios. The central bankers perform the wealthy's bidding since they are rewarded by the investment banks for their loyalty with lucrative speaking engagements once they leave public office. Wall Street is a filthy, crooked, rigged casino.
The purple arrows show the tight standard deviation bands that jammed prices higher. Tight bands indicate that a massive move is on tap but they do not predict direction. In both cases, early 2013 and early 2016, the massive moves were higher because the Fed and other global central bankers have their thumbs on the scale.
The ADX shows that the trend higher since former Fed Chairman stepped in with QE1 in March 2009 to save the stock market and protect the wealthy, remains a strong trend but is rolling over since the start of the year. The ADX will need to roll over further to verify THE top.
The Aroon green line is falling hinting that THE top is in for the semiconductors. These prices for the chips may not be seen again for many months even many years. If you are a young person contemplating placing money in the stock market; don't. Let that money sit on the sidelines, do not worry that it will not receive much of a return, if any. In a year or two, you will look back and realize it was a smart decision and at that time, depending on how things play out, you may have an excellent chance to enter the stock market at far lower prices. 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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