Mid-Week Index Overview
Wednesday has arrived and departed, and now it’s time for the Mid-Week Overview of the Major US Indexes!
I always start with the Dow:
- Price broke to record highs (haven’t you heard it enough in the media?)
- Price is seeming to complete a downswing (or counterswing)
- Price is above a significant trendline area
- Price is above all major moving averages, which are displaying a bullish bias
- Momentum made a new high on September 17th which forecast the new price high
- Momentum is now diverging relative to the price ‘swings’ which signals a potential loss of buying pressure
- Volume has been declining on the recent swing up in price (bearish)
- Price should find support at the 13,700 range should it retest this zone (odds seem to favor it)
- Price is in a confirmed uptrend
Next is the S&P 500:
- The biggest technical signal is that we have “Non-Confirmation” with the Dow Jones
- The Dow is making new (lifetime) highs while the S&P is not
- Price is above a trendline, but whether it holds will be determined soon if not tomorrow
- The moving averages all signal bullishness
- The New Momentum High of about September 18th forecast the new price highs as well
- Momentum is now diverging, as is volume (identical to the Dow Jones)
- Price is also in a confirmed uptrend
Realize that the Dow Jones is comprised only of 30 “Blue-Chip” companies that is supposed to represent all (most) of the US Economy, with some exceptions (utilities, etc).
The S&P is a much broader index that represents 500 companies. What this “non-confirmation” indicates is that money is just slightly supporting the larger capitalized, more established companies currently.
Look for price to attempt a test of the indexes rising 20 period moving averages at a minimum before resuming a strong upwards bias.
If price fails to retrace even to the 20 period EMA, odds favor a very strong upwards move in price as a result of that strength on the part of the buyers (and “short-coverers”).