Important technical observations on the major stock indexes

Please note: I wrote this post just before market open on Wednesday.

It’s hard to convince me to be a buyer on the dips. I am still a seller on rallies. Let me explain….

Pull up your one- and three-year weekly simple moving average charts.

I take a look at the Dow and S&P 500 e-mini futures on the weekly chart and observe how the index levels are holding precariously above the 50-week moving averages.

As poorly as the growth oriented NASDAQ 100 futures have performed on a relative basis, it is still right around the 50 week moving average; hanging closer to the 50 sma than the 100 week sma.

When I look at the weekly charts on all three, I do notice bear flags forming on all of them. The three major stock averages here in the United States have a long way to fall if they do indeed take a tumble. Mathematically speaking, they can’t remain above the 50 week moving averages forever. Moreover, the technicals are not in the bull camp’s favor.

The fact that the import/export price numbers came in much hotter than expected this morning doesn’t help the bull case. Moreover, retail sales as well as the industrial production data were much higher as well. This lends to more possible hawkish action by the Fed.

To be honest, I can’t believe how complacent the Fed has become. If I wear my tin-foil conspiratorial hat however, I do know why it has been complacent.

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One thought on “Important technical observations on the major stock indexes

  1. Short term outlook is bullish for stocks. Majority is def cautious and skittish now after the dip. Big bull runs never end this way- it will be during a euphoric, manic blow-off top when the big crash will hit, blindsiding main street.

    That said, on the long term it’s definitely a time to sell or maybe hold. I wouldn’t be buying anything this year. But this will go on for many more months, possibly even a year or two (at the outside).

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