Before I begin this post…
Dear WordPress, your new editor Gutenberg has all kinds of bells and whistles and innovative gadgets (especially these infernal blocks). I hate it. It is completely distracting to me to try to figure it all out when all I want to do is write, upload some charts and be done with it. The editor is now way too complicated and it seems to be a ‘whee, look at how advanced we can make your writing experience!’ situation that is great for blogger geeks. If it ain’t broke you should not have fixed it, or at least kept a retro alternative in place. Thank you for your time.
NDX, SOX and RUT have all made crosses of the daily SMA 50 below the SMA 200, and SPX is about to. The “DEATH CROSS” is TA jargon for the simple fact that the intermediate trend has turned down (SMA 50) and cut into the long-term trend. It’s great for financial media eyeball harvesting.
But it is a technical condition and it does imply a weakening of trends, which of course would need to happen before a reversal of those trends.
The NDX cross is very new and was unsurprisingly met with a big spike upward, as often happens.
The SOX cross is older, which makes sense given the SOX→NDX→SPX leadership progression we have repeatedly noted. The SOX death cross led the NDX cross, which is leading an SPX cross.
But before we get to SPX, let’s pop in the brutal looking RUT, which crossed in November, made a new low yesterday and typical of this whipsaw market, Hammered to close the day above the previous short-term lows.
And so here is SPX, about to cross. Will it follow the norm and meet the cross with an up spike? Who knows? But we can say that it has eliminated a would-be Inverted H&S and a ‘W’ pattern, each of which had upside measurements to around 3000. Now it is just a brutal short-term whipsaw.
And that is favorable to our view that the market is likely to break down before too long, at the conclusion of this grind phase. There is no discernible bullish pattern on the daily above, the intermediate trend is turning down, the leadership progression is in place (this time to the downside) and the weekly chart shows a potential pattern (pending its neckline) that measures to our long-held target of 2100-2200, which would simply be a take-back of the post-election Trump rally.
The above are my opinions and observations. For the actual historical facts of SPX Death Crosses, check out Quant Edges’ post…
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