Weekly Commentary

It’s time to expand our horizons beyond the stock market to other inter-related markets and also glean insights from the sector rotation model. All charts are courtesy StockCharts.com, and we will be examining the “Intermarket Relationships” profile of the last 200 days first: I have highlighted the clear negative correlation (inverse relationship) between commodities (blue…

As mentioned previously, the classic technical analysis pattern of the “Broadening Formation” has formed on the Dow Jones Index, which has historically bearish implications. Before we look at the charts, let’s define “Broadening Formation:” Quote From Investopedia: “A pattern used in technical analysis to predict the likelihood of a reversal in the direction of the…

This week saw a precarious shift in the direction of the major US Indexes due to comments by Federal Reserve Officials who still have power to affect price swings in markets. The bulls scored a major victory but still have work to do to overcome the daily downtrend on most Indexes. Let’s look: The Daily…

Last week saw some extremely volatile and violent selling pressure hit many high-flying stocks and the broader indexes as well. A sell swing was imminent, but was deeper than most people anticipated. In the coming week, we have major economic announcements that will help set the tone for the market likely for the rest of…

Could we be on the verge of a new downtrend on the US Indexes? Let’s look at the past for some clues. Uptrends are defined as a series of higher highs and higher lows. Downtrends are defined as a series of lower lows and lower highs. To change an uptrend, price must first make a…

The implications from Sector Rotation Theory are showing more bearish/defensive themes are occurring with money flow across the nine major US Sectors. Over the last 65 days, energy prices led the charge with the greatest sector percentage increase, and we are seeing significant strength as well in the usually dormant utilities sector. Consumer staples (a…

Let’s take a brief look at some charts that have interesting implications or patterns occurring right now: Citigroup (C): New Momentum Lows, indicating the potential for lower price lows Bearish surge in volume Bearish potential breakaway gap or measured (continuation) gap that filled Bearish Breakout from consolidation range Let’s hope that, in this case, this…

Inter-market relationships have been performing somewhat according to script lately, so let’s look quickly at what we might learn from the current posture. An overview: Bond prices and stock prices move together (though bonds often lead stocks) The US Dollar Index moves inversely to most commodity prices (inflation based factors) Commodities and bond prices often…

There is a bit of ominous information for the Stock Market in terms of the recent non-stop rally in the $CRB Commodities Index that occurred both before and after the September 18th US Federal Reserve rate cut. The Federal Reserve is vigilant in its campaign against inflation, and rising commodities prices are often used as…

The action of the last week casts a bearish pall not only on the charts of the major indexes, but from the readings of the sector rotation model. Let’s look at two graphs on sector rotation: The first graph measures price movement/money flow of the last 65 days (a “longer” term perspective): The brief interpretation…