We had a pretty wild morning today which started off with about 1% gains in the first half hour but a rally in the dollar caused a sharp reversal in stocks. Those gains quickly turned to losses and that was about all she wrote for the day. The S&P 500, Russell 2000 and Dow lost just over 1% today. Even worse, they're starting to show some technical damage. I wrote about how I felt like the indices were masking some deterioration in leading stocks and it looks like that game is coming to an end. The small caps continue to look the worst. The Russell 2000 broke its March trendline on Friday and closed below its 50-day moving average today. To top it off, it's not far from breaking the October low which would confirm a double-top.
The transportation index is also in danger of confirming a double top. Followers of Dow Theory would say that doesn't bode well for the broader market.
The S&P is a couple of days behind the Russell. It's now threatening its March trendline and is one bad day away from its 50-day moving average. It also dropped back under its September highs today, so that 1070 - 1075 zone may have flipped back to resistance from support.
It's no surprise that the Nasdaq is showing the most resilience with the recent impressive moves by the likes of AAPL, AMZN and GOOG. But if the broader market really starts sliding those stocks could see some sharp reversals and take the Nasdaq with it.
The Russell 2000 closed a little bit below its 50-day moving average so I'm setting its intermediate trend to lateral.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Lat(-) |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Great recap Mike. In laymans terms, what are the main differences between log and linear charts, pros/cons etc.
Thanks in advance!
Thank you for all the hard work and dedications with the charting. I have you linked to my blog and hope is generates some cross posting. Keep up the good work. QB