Thursday, July 02, 2009

Stock Market - Technical Picture Turning Bearish



Above is a daily chart of the S&P500 and as you can see there is a head and shoulders pattern developing. A move below last month's low will confirm the pattern suggesting lower prices for the stock market in the days and weeks to come.

Below is a weekly chart of the S&P500 and in the lower pane is the stochastic indicator. As you can see the stochastics are on a sell signal right now after being in overbought territory. Notice on the price chart how the S&P tends to reverse its trend once it touches the 50 week moving average. In my opinion the technical picture is beginning to turn bearish for stocks especially if last month's low is taken out.

3 comments:

Anonymous said...

OIH looks very much the same way. Additionally, stocks that have lead us up into the bulk of the rally have been demonstrating some relative weakness into rallies.

Quality Stocks said...

If stocks break the neckline, what are the likely support areas?

robert d said...

You are making too much of Thursday 7/03 - before holiday, extremely low volume. Shorts got a little rope to play with.

The key is earnings. If they are good, whatever that means, market goes higher. If earnings are bad market will tank.

Better than Vegas,

d

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