Well the last 24 hours have proven to be interesting if you have any interest in equity and index markets. For quite some time all major US index markets have been over extended from their moving averages on the monthly charts and in need of a pullback to more sustainable buying levels. We may just be on the way to seeing these moves happen. Let me break down each major US index.
I will start with the US SPX 500 – Cash (below). Firstly, I have seen a strong turn to selling from the bearish candle that set the highs in breaking 2010. From there I have seen more strength from sellers than buyers and now there is a down trend in place with the major support/resistance level of 1990 left behind. Nothing on this chart suggests anything but bearish sentiment for the short term.
US-30 Cash (below) looks similar to the SPX 500 which comes as no surprise really. The key level that many were watching closely was if we would hold 17,000 or fall below. In this case we fell below with ease and last night’s session saw a confirmation of the bears coming to feed.
US NDAQ – 100 – Cash (below) failed to hold 4100 after a struggle at that price point for a few weeks. The next key level for me was the round number of 4000 which was broken last night. I am now very much looking for trading opportunities off 4000 to get short this market. Once again the sellers have come in and seem to be forcing this tech index lower. The daily chart trend is now down.US – Small Cap 2000 – Cash (below). This market has been the leader of the US index markets in that it has looked bearish for longer than any of the other markets I have spoken of. The weekly is now in a down trend and even though this market has had a bigger pullback to the downside, it still looks to have more legs lower.
There are a couple of things to consider when trends change like this. Firstly just because the trends are currently down doesn’t mean they will continue long term. Also note that I am not calling a doomsday situation with markets falling and doom and gloom ahead as many others start to predict the second the sellers arrive, far from it. I am saying that the signs are showing for a healthy pull back to the moving averages on the monthly charts.
In trends we need highs and lows and on the monthly charts there hasn’t been a significant higher low in some time, this could be the start of that move back to the mean. Finally there is some significant news coming out over the next 48 hours, chiefly Non Farm Payrolls, so all can switch fast with some good news, however I am still in the camp of the bears looking for shorts to chew on for the next few days and possibly weeks.