All Index Charts Suffer Damage: What s Next for the Market? Wednesday saw broadly negative internals on heavy trading volumes.
Jan 28, 2021 | 10:45 AM EST
Virtually every major index chart suffered some technical damage Wednesday. Most are now in neutral trends. Market breadth deteriorated further as well.
Meanwhile, some of the sentiment data moderated.
Let s take close look at charts and market indicators.
On the Charts
Source: Worden
Negative technical chart events occurred as follows: The S&P 500 9see above), DJIA, Dow Jones Transports, MidCap 400 and Value Line Arithmetic Index all closed below their near-term support levels. The S&P, Nasdaq Composite and Nasdaq 100 registered bearish stochastic crossover signals.
Are Clouds Gathering for This Market? S&P 500 breadth remains on bearish divergence.
Some more worrying signs appear to be showing in the stock market.
While the bulk of the index charts remain in near-term uptrends, psychology data and valuation continue to be of concern for us.
The charts of the major equity indices saw some weakening Tuesday, with two closing below their near-term support levels while two more registered bearish stochastic crossover signals. Also, the S&P 500 and its percentage of components above their 50-day moving averages are on a bearish divergence as discussed below.
On the Charts
Source: Worden
Some Index Charts Rally to Resistance Sentiment improves slightly but remains cautionary.
How did Tuesday s positive trading session impact the charts and data from the major equity indices?
Let s check.
All the major equity indices closed higher Tuesday with generally positive internals.
However, the only technical improvement was seen on the Value Line Arithmetic Index, which managed to close back above its near-term uptrend line, turning its trend back to positive from neutral.
None of the other indices managed to achieve that status and remain neutral except for the Dow Jones Transports (see below), which remains negative.
Further, the Dow Transports did manage to trade up to its near-term resistance. However, it is not uncommon, that once a chart breaks important support as the Transports did on Monday, for said chart to test resistance and then fail in subsequent sessions. We suspect that may be the case for the Transports but await confirmation in that regard.