Mid-Week Fly-by of the US Indexes

Being as that it’s Wednesday, let’s take a mid-week look at the current (fractured) state of the US Equity Market:

Dow Jones Daily:

Price did indeed find support at the confluence of the key moving averages, as I indicated earlier that it might. The move by the Fed apparently was not enough for the ‘cutters’ on Wall Street, but a positive swing may be in the works.

• Price supported at the key moving averages
• The “path of least resistance” is to the upside
• Price carved out a new momentum high but is far from a new price high. This is a type of ‘non-confirmation’.
• We must now declare the daily chart to be in a confirmed (new) daily uptrend (higher highs and higher lows with price above key averages)
• Volume has ‘picked up’ to the upside swings

The NASDAQ:

Allow me to interpret all the lines I’ve drawn:

• There seems to be a major horizontal line which has served both as support and resistance.
• We are testing that zone now
• Price has broken beneath a very short-term upwards sloping trendline (bearish)
• Volume is NOT confirming recent upwards price action (bearish)
• Momentum (oscillator) is sloping upwards but has failed to make a new momentum high (nor has price made a new high)
• Price is trapped around key flat-sloped moving averages (neutral) but is currently beneath the 20 and 50 (bearish short-term)

Usually, for a healthier market condition, we would expect the NASDAQ to look ‘better’ from a technical standpoint than the Dow or S&P 500. It does not. This fact has bearish implications.

The S&P 500 chart is nearly identical to the structure of the Dow Jones. I will not belabor the point.

The Russell 2000:

Allow me to explain this interesting chart:

• Price is in a confirmed downtrend on the daily chart (lower highs and lower lows)
• Price recently inflected downwards of a declining trendline from October
• A head and Shoulders formation has formed and the target objective has been achieved
• Price recently violated a very short-term trendline to the downside (not extremely significant)
• Momentum and price are not making new highs (bearish)
• The moving averages are in the most bearish orientation possible (20 beneath the 50 which is beneath the 200)
• Price is beneath all key moving averages (bearish)
• The path of least resistance (best motion) is actually to the downside

Summary:

What we are seeing is “Non-Confirmation” in the US Indexes.

The Dow Jones and S&P are pointing “higher” while both the NASDAQ and Russell 2000 (which tend to lead the market at times) are both pointing lower.

It could be indicative that investors are fleeing out of riskier, more volatile stocks in favor of the more steady “Blue Chips” or established (defensive) companies of the Dow Jones.

If so, this could mean that larger investors see rockier times ahead and are positioning themselves accordingly.

Perhaps we should heed their movement if indeed this is the case.