Now I've pointed out that the market is near the completion of this multi-month rally dating back since October. This time I want to bring back my indicators to give a better perspective on the Market. I've mentioned before that often times the MACD will give a smaller divergence within a larger divergence to complete a trending move. You throw that in with a potential Head and Shoulders pattern and you have a Tip toppy market. Look down below and see the chart that I have presented.
On to the dollar! We have seen this sideways movement for several sessions, but nothing really. So I'll dive deeper and mention the moving averages for the bullish case. Below you'll see that the 20 day Ma has crossed the 50 day Ma. Since the 20 and 50 are so close to one another, they act as a confluence of support. Even though prices dipped slightly below this level today, the overall pattern is developing into an inverse head and shoulders bottom.
The U.S. Dollar- Daily Chart
We were looking for the metal to get a bounce and it finally came! Now that gold has broken out of its bullish falling wedge pattern, it could be that we rally for a few days to work off these oversold levels. Gold has been hammered for a while now and the sentiment out there tells me a short-term bottom is in. In terms of physcology, when everyone talks as if the metal is near its death bed, I find that to be actually an opportunity to pick up some shares.
GLD- Daily Chart
The last thing I want to talk about is the internal indicator known as Stocks above their 50 day MA. It reveals the participation among stocks within a specific index. I have chosen the S&P 500, and as you can see, there are fewer stocks above their 50 day MA now than there were at the October Peak. Why is this important? It means that fewer stocks are selected for purchase during this entire leg up. Once the demand dries up for the Apples of the world, where will they look to next? It won't be other stocks, it will be a liquidation process because the fundamentals of the market are questionable. The market likes good news, and it can deal with bad news, but what it can't deal with is... uncertainty.
Stocks above their 50 day Moving Average
If you want daily updates for the Market, then you might like my premium newsletter. It will include the trades from a model portfolio that took me 4 years to develop. It will be available in April to start off the month. For the price, I think it will be well worth the service to you. If interested,send me your email address so that I can begin making the subscriber list.
Have a great weekend,