Stocks Head South

If you've been reading my posts over the past week, you would know I was very clear about which way I thought the stock market was headed. On August 24th, I wrote about how this move to new highs in the stock market was probably a false move. There were many reasons for my cautious/bearish outlook such as seasonality, lack of momentum, inter market relationships and just plain old technical analysis.



Above we see the S&P has broken its short-term trendline. The market is still open as I am writing this (12:30 pm) so it will be interesting to see where we close.



Remember the weekly Doji that I wrote about last week? Doji formations are very significant at market tops and always get my attention and respect.



Above is the S&P compared to the Shanghai index. The above chart was the real tip-off as far as I am concerned that the S&P was about to head lower. Notice the strong divergence between the 2 markets. The S&P made a new swing high but the Shanghai index made a much lower high. You can read my original post from last week entitled questioning this move up in the stock market.