Is the Market Skating on Thin Ice? Most chart trends are bullish, but shock absorbers tell a different story.
Dec 28, 2020 | 10:14 AM EST
While no sell signals have appeared on the charts to date, investor sentiment levels and extended valuation continue to suggest the market s shock absorbers are very weak, leaving the markets vulnerable to any unforeseen negative news.
On the Charts
The indices closed higher Thursday with mixed internals on the NYSE and Nasdaq on light trading volume. The only technical event of note generated was the MidCap 400 (see below) posting another new all-time closing high.
The chart near-term trends are unchanged, with the S&P 500, Nasdaq Composite, Nasdaq 100, MidCap 400 and Russell 2000 bullish, as the DJIA, Dow Jones Transports and Value Line Arithmetic Index remain neutral.
Index Charts Weaken: Cause for Concern? Forward earnings estimates for the S&P 500 have dropped.
Dec 23, 2020 | 10:32 AM EST
The charts of the major equity indices have weakened, but remain a mix of neutral and bullish trends. The data, on the other hand, still suggests some caution is warranted.
Meanwhile, forward 12-month consensus earnings estimates for the S&P 500 have seen a notable decline, stretching what appears to be an overvalued market even further.
What s this all mean for investors? Let s take a look at the charts and data.
On the Charts
Source: Worden
The major equity indices closed mixed Tuesday with a mix of positive and negative technical events. Importantly, no violations of support occurred that we would need to see to become more cautionary from a chart perspective.
Indexes Successfully Test Support Levels Why caution is still warranted, though.
They passed the test.
All the major equity indices closed at or near their intraday highs Monday with successful tests of their support levels. The charts remain generally positive.
However, the psychology data continues to suggest too much bullish sentiment exists while valuation remains extended with their combined signals suggesting caution is warranted.
On the Charts
Source: Worden
The only index posting a gain Monday was the DJIA (see above) as the rest posted losses. However, the early morning selloff proved to be the lows of the day as buyers came in to push all the indices higher to close at or near their intraday highs.
Watch These Important Index Support Levels Monday s close will be extremely important.
Dec 21, 2020 | 11:15 AM EST
Nearly all the major equity indices remain in near-term uptrends. However, the market s weakness on Monday may change all that.
Monday s close will be extremely important regarding whether or not the charts will be able to withstand the early selloff and hold their respective support levels.
Closes below support would darken our outlook as the psychology data and valuation have been suggesting a fairly high level of risk has existed in the markets for the past several sessions. This appears to be some of that risk coming to fruition.
Market Deadlock: Charts and Data Grapple for the Upper Hand The stalemate continues.
Dec 18, 2020 | 11:00 AM EST
While the charts of the major equity indices remain positive and lacking sell signals, the psychology data and valuation continue to imply a fairly high level of risk currently exists for equities, as discussed below.
On the Charts
All the major equity indices closed higher Thursday and at or near their intraday highs with positive internals on higher trading volumes.
All made new all-time closing highs with the one exception of the Dow Jones Transports, which is now the only index in a near-term neutral trend as the rest are bullish.