US Stock Market, Monthly Charts Updated

On a morning when MarketWatch is on the job promoting the recent volatility with this goofy headline, The pattern that signals a potential 25% plunge for the S&P 500 by spring, it is a good time to take a big picture snapshot.  With long-term yields surging and the curve doing so as well, with the market’s general over valuation and with traditional market spooky season combined with a sad and cartoonish presidential election, there sure is every potential for a market correction or even a bear market kick off.

But it would not be because someone is warning us about… yup, you got it, a bearish rising wedge (only the most hyped pattern in TA) that the S&P 500 is in.  A blogger is posting about it and MarketWatch simply selected it because it fits the story they want to sell today, which of course fits the way investors are feeling this week.  Anyway, here is where the US market is at.

Dow is at support.  A cyclical bear market would bring it to major support, but why don’t we fail initial support first before getting over excited?

dow monthly chart

S&P 500 is at and above support.

spx monthly chart

Nasdaq 100… frothy?  Sure.  Over valued?  I’d bet.  Risk vs. reward very poor?  Probably, if you are a value seeker.  After making a new all time high, that could be as good as it gets, finally closing the loop on the year 2000 bubble.  The slip back below resistance is not positive, but we are in-month and it bears watching.

ndx monthly chart

Semiconductor Index could hit 550 again if a cyclical bear ensues.  But as long as it is above 550 it targets 930.  Oh and by the way, it is above even the first support level.

sox monthly chart

Russell 2000 is still in a suspect looking pattern.  But RUT already took a cyclical bear market loss of over 20% when it Fib’d from the top to the 38% pullback.  Bear resumption would bring it back to 850, where there is massive support.

russell 2000 monthly chart

Speaking of the Russell 2000, we have been noting in NFTRH how the small caps have led for all of 2016 but are in a downtrend channel post-2013.  The advice has been that insofar as you are a bull, you might think about shifting from a small to large cap bias as RUT-SPX approaches the downtrend line.  Last week it pretty much doinked it.

rut-spx ratio

You know, if we are going to go by strict definitions (something I usually don’t care much about) we can also state that the Semis took a quick bear as well in 2015.  The question is whether or not the 2014-2015 disturbance cleaned out the markets for a real run higher (all we have been on this summer has been a post-breadth thrust, post-BREXIT momo surge) or was 2015 just the first break with more to come?

I am certainly not going to try to over define the situation during a week with max economic data on tap, prior to a meeting of interest rate manipulators (who are probably watching the bond market’s mini rebellion with bemused interest) during the lead-in to an election of sad choices.  But as of now, with MarketWatch pumping the bear headlines, this stock market is i.n.t.a.c.t.

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