Wednesday, July 22, 2015

A Wile E. Coyote Market

The Market Trend Model (data sheet) remains with a positive bias as the stock market indexes ran into some gravity this week when Apple's third quarter earnings disappointed the street.  At least for now it appears the stock market indexes have no desire to stay near all time highs as economic growth concerns once again dominate traders' thoughts. 

The Nasdaq (chart) and the Nasdaq-100 (chart) are holding above their most recent technical breakouts, although it remains to be seen if these indexes can continue to hold onto their latest attempts to establish new trading ranges. Meanwhile the S&P 500 (chart) continues to see significant resistance at the 2,120 price level as this index has been unable to breakout through the top if its multi-month trading range. Lastly, the Russell 2000 (chart) printed a tentative sell signal today as it closed below its 10-week moving average.

The bearish technical divergences seen with the market internals I wrote about last weekend continue to weigh on the indexes.  As I stated last Saturday, "be aware that during the past year the stock market indexes have usually turned lower soon after making new all time highs."  The price action this week so far has borne out this troublesome and frequent pattern.

At the moment the stock market appears to be suffering from a sudden onset of altitude sickness and lower prices once again may be on the horizon. As usual, remain mindful that anything can happen from one day to the next.