Dow: On a long-term basis looking at the monthly charts .. all is bullish, with a couple of caveats. Its nearing the previous high of 14,198 but has yet to take it out. The ADX is not showing a strong trend, as compared to say 06,07,08 since it’s under 30. It hasn’t tagged the upper Bollinger bands since early 2011, a failure to do so is a strong indicator of waning momentum. So we need to see what happens in February.
The weekly charts dow chart, however, has all indicators pointing up. Pushing the upper BB channel, strong Ergonomic, trending ADX but not overbought.
The daily Dow chart is showing some cautionary signs. The ADX is in way overbought territory and rolled over once but seems to have regained its upward movement. But the Ergo has crossed under and giving a sell signal, waning momentum. Also so far there is a BB upper band failure to penetrate. I would definitely not be participating in this bull until 14,200 is definitively taken out.
S & P: The SP monthly is much the same as the dow, with the same early warning signs of a possible reversal. Until it takes out the 10/07 high of 1476 it could be headed for a double top, or even a head and shoulders top if it turns before hand.
S&P weekly, again similar to the dow, looking quite strong from this view however a breach downward thru 1475 would indicate a correction is in the works.
Daily S&P is giving warning signs, once again similar to what I mentioned above for the dow. Plus it has merely ran up to the underside of the 25 day LRC (yellow line representing 25 day linear regression curve). Often this precludes a move in the opposite direction .. or if it breaks thru then another leg up.
Nasdaq 100: As I mentioned in my previous post the Nas could be setting up a bearish head and shoulders pattern, most visible on the weekly chart. But looking at the monthly chart, a possible turn could be in the making since it has done almost an exact 50% retracement of the move down from the lofty highs of 3/2000. This mkt has stalled out as evident by the lack of trend in the ADX and the ERGodic sideways. This could be a top or a consolidation before another run up. I think its done. AAPL is in a strong downtrend and that is bearish for the nas.
The weekly Nas still has the possible bearish HS pattern in the making but price has broken above the 50/10 LRC and the 25/5 LRC is about to cross up, however still needs to cross above the purple 50/10 … so jury is still out. The Ergo looks strong and the ADX is starting to trend, at least on the weekly basis not the daily.
The daily Nas has been stuck in a range from 2770 to 2703 all January, and therefore this lack of any trend has caused the ADX to dive to 18. You can also see the BBands have tightened up dramatically, which is like a coiled spring. That low volatility is a precursor to an explosive move one way or another. So until it breaks out of this range we have a pretty dull market. If it breaks up you have resistance at 2800-2820 from the underside of that old broken trendline. If it breaks down first test is that up trendline around 2680, but the big test of course is that neckline around 2500ish. My guess is that this thing will tank but I tend to be more bearish biased.
Since Apple is such a huge weighting on these markets, I think I will do a post on that next.