Stock Market Technical Indicators & Analysis
This monthly RWB chart of the SPY since 1994 shows what the 2000 and 2007 bull market tops looked like. It is clear that the market remains in a strong up-trend until the red lines (shorter averages) decline and the RWB pattern disappears. The current market, as measured by the SPY, remains in a clear RWB monthly up-trend. Stay tuned….
The GMI remains at 6 (of 6):
We growth stock investors are so focused on the innovative tech stocks that we often overlook the strongest non-tech stocks. For the month of December, 2017, the top 5 industries and their stocks hitting yearly highs on Friday were:
In comparison, semiconductors were up just +0.12% and internet content and information +2.9%. So maybe the US or the world is going to go on an infrastructure buying binge in 2018? Look at the beautiful RWB daily up-trend in BTU as an example of how nice and consistent move up it has had. It even had a green line break-out (GLB) to an all-time high in November.
Meanwhile the tech stocks, as measured by QQQ, are in a short term decline. Note that the index has now closed (dotted line=closes) below all of its red line shorter term averages for the first time since early December. As long as it closes above the blue line averages I am not too concerned. However, the QQQ needs to close back above all of the red lines to resume the up-trend, as it did in October and December. The RWB pattern also needs to endure with all of the red lines above the blue lines with a white space between them. My blog glossary explains these technical patterns.
The SPY is somewhat stronger, perhaps reflecting its non-tech stock components. But it closed above only 2 red lines (see red 2 at top of chart).
Nevertheless, we should heed the fact that both indexes have receded from their peaks reached in mid-December. I become concerned when many of the market leaders look wounded like these:
AMZN and GOOGL are holding up better (into shown). But are the others forming their bull market tops? Also, is SQ hibernating or topping?
I don’t wait around holding declining stocks. Buy and hope is not my style. Once a stock closes 2 days below its red lines I like to exit. As the great William O’Neil has written, all stocks are bad, unless they are rising.
Meanwhile the GMI is at 6 (of 6) but the more sensitive GMI-2 is getting weak, at 4 (of 8). The QQQ is trending down and has not yet reached the area of technical weakness where it typically bounces.
All three major index ETFs (QQQ, SPY, DIA) have their fast stochastic (10.4 daily) below their slow stochastic (10.4.4 daily). For me, this indicates short term weakness. The longer term technicals remain strong for these indexes with the GMI at 6 (of 6).
A stock that came up on my RWB scan is SGMO, a biotech. SGMO also looks like a possible cup with handle pattern.
Note that SGMO has now closed back above all 6 red lines and is in a RWB pattern.
