Below is the link to today’s Briefing. When I work with clients, I try to demonstrate the importance of viewing the development and structure of any move in any market in multiple timeframes. While the Indices eliminated the series of lower highs I have been watching, the structure of the advance was very weak. Also, the intermarket divergences continue and the NASDAQ has some of the appearances of the year 2000, when comparing the futures with the composite.
Based on the above, I am very concerned over this market in the intermediate and longer term timeframe. The structure is not supporting a continuation of this rally, at least at this time. However, there are times when exuberance or psychology will outweigh structure and allow for price development to continue unabated, as it did in 2000………until it stops. Therefore, it is difficult to imagine the Indices being this close to all-time highs and not putting in at least slight new highs.
Be aware of any short term inter-market divergences that may exist in the near term, especially if the NASDAQ puts in a new high that is not confirmed by the S&P.
Price development when analyzed against the structure longer term is still showing warning signs.
The Briefing for Friday is a little longer than normal. I wanted to review what I have been saying about the longer term development of the Stock Indices and then give a good analysis for strategic purposes. Additionally, the Metals may be setting up for a large move as well. The technical pattern is not yet confirmed but it will be important to observe their price development carefully.
Stock Indices sold off substantially and have reached a point of being extremely oversold. While price can continue lower and the Indices can stay oversold for a longer time, this is the point where we have to consider some type of countertrend rotation to work off the oversold condition. If and when that countertrend rotation occurs, it will be very important to analyze it. If it is, in fact, countertrend and not a simple rotation back up to test the highs, then then next move lower could be significant.
As I have discussed for weeks, the structure of any rally has been weak and weakening. It was not until a few days ago that we saw any potential strengthening, but that was quickly erased with Friday’s trading.
It is important to understand price development, but it is equally important to understand the structure of any price move. For quite some time, I have been stating the structure of the increase in price has been weak and weakening. Other technical aspects suggest the potential for some type of greater degree timeframe rotation down. However, the Stock Indices are now at a critical decision point. Either they turn down in the next few days, or we will likely see new highs put in before we potentially could see another move lower.
In addition to the above, certain aspects of the structure are improving. While the geopolitical and economic environment suggests the opposite should be happening, I cannot ignore what information the market is giving me. However, while I am still not positive on the Indices, I have to be aware the probabilities may be shifting for another move to put in new highs. Yet, I am cautious on any move higher.
Below is the link to today’s Briefing.
“Successful investing begins with an analysis of where
a market has found value.”
There are two types of financial analysis: fundamental and technical. What is most important in any analysis is the reaction of the market to information that comes into it no matter if it is fundamental or technical in nature. Understanding the behavior of the market participants can give an edge to an investor, or investment manager. The analysis we provide covers a variety of markets and has been proven successful over a period of time.
Whether you are an individual interested in managing or trading your own funds, an institution or an investment professional, the breakdown, analysis and determination of where a market has found value that we provide in our different services can give you an understanding of where to execute tactically in terms of risk and reward.
We have worked with many individuals, corporations and investment managers over the years in providing up to date analysis and recommendations. If you are interested in being trained in how to analyze and trade the markets yourself, our private consulting services will give you the tools necessary to develop your own investment business.