June 12th, 2014
in contributors, syndication

Bearish Signals Yesterday, 11 June 2014

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Investors had run to the Utilities in a search for Return. The Dow Utilities Index had become greatly overbought, to the point at which the Candlestick pattern and our Indicators foretold a Trend Reversal in the making - which is exactly what has happened. The balloon has burst.

Follow up:

The second chart of the Dow Utilities clearly shows a "Crimp" between Indicators ADX and the Stochastics, a highly telltale "Blimp" between Indicators "Chandelle 1" and "Chandelle 2," and a "Crimp" between "Chandelle 2" and the RSI. These are powerful bearish warnings. A fall in the Dow Utilities' values was inevitable.

There are bearish warnings in the stock Indexes today. The S&P 500 had shown us a bearish Candlestick "Shooting Star" on June 6, at the top of a long price rise. We called attention to the bearish Exhaustion Gap and Island Top which had arisen at Opening on that day. We know that Gaps tend to be filled later, and that they act as price magnets. When they become filled, we look upon that occurrence as a bearish sign.

The S&P 500 filled its Exhaustion Gap today, which is a bearish signal. The S&P 400 Midcaps has filled its own Exhaustion Gap today, and the S&P 600 SmallCaps has poked into its own Exhaustion Gap.

The Dow Industrials formed an Exhaustion Gap of its own upon market Opening on June 6. It was a tiny Gap, to be sure - only a little more than one point, but a real Gap nevertheless. A Gap is a Gap, regardless of its size. Importantly, that Gap has been filled today, too.

I think that it is of great significance that the Dow Industrials and the S&P 500 both filled their own Exhaustion Gaps today; that the S&P 400 has done so, as well; and that the S&P 600 has poked into its own Exhaustion Gap. [So has the S&P 100 (not shown)].

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