U.S Equity Index’s Overview – A Repeating Pattern

1월 9일

U.S Equity Index’s Overview – A Repeating Pattern

The Bull Thesis – Ascending Triangles
The 200 day (blue line on each chart) is squeezing price up towards each red resistance line making each chart look like an ascending triangle (evident on every chart). With the 200 day as underside support for price and the 200 day sloping upwards, things remain positive.

The Bear Caution – Throw overs, Transportation Lag and the Hidden Wedge
We need to be aware and cautious of a throw over top on each chart which is always a possibility. Price on each chart would need to fall back below the red support line (pricing having only been thrown over the red line to come back down again).

The DJT – Transportation (Chart 1) is lagging behind all the other charts and has not taken out its Nov 2021 or Jul 2023 highs. This relative weakness in Transportation is worrying as this index offers an early indication of potentially less manufacturing and goods being transported, with this chart lagging and failing to take out its highs, it could be an early indication of a more pronounced slowdown in the economy. This chart we need to keep a very close eye on. If DJT fails to rise above its red line and loses the 200 Day, this could be a very bad signal.

We also need to be aware of how one important chart is showing a rising wedge pattern (Chart 3 – Major Market Index XMI). This old school chart is watched by the OG traders and investors as a more general market chart. Lets keep an eye on the upper diagonal on the rising wedge for resistance on this one. A rejection here could be something of an early warning sign and obviously losing the red support line would confirm this.

Charts 4 - 6
4. S&P 500 SPX
5. NASDAQ NDX &
6. US Small Cap 3000 RUA
All these charts appear to be about to break into all time highs, however they are slightly lagging the Dow Jones Industrials DJI and the Major Market Index XMI which have broken all time highs. In the Charts 4 - 6 break out above their red lines (above recent all time highs), this could be another confirmation signal of bullish momentum. Obviously a rejection at this level does not bode well.

SUMMARY
In this hard to navigate market environment we need to pay attention to DJT (Chart 1) and XMI (Chart3) as they provide clear boundaries that we can watch for hidden bear signal warnings. On the contrary, in the even these charts and charts 4 - 6 breach their respective resistance levels mentioned above we can be assured that the wind is at out back in this currently confusingly bullish market.

If you like this overview please let me know and I will complete similar overviews for other markets and indices.

Thanks for reading

PUKA