econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 26 July 2015

Stock Market Indices Exhibit Divergent Behavior

by Erik McCurdy, Prometheus Market Insight

For two months, we have been monitoring developing weakness in the historic stock market bubble that has suggested the bull market from 2009 is becoming susceptible to a long-term reversal. The short-term breakdown in early June was followed by a quick move down to long-term support at the 200-day moving average in late June.

That critical support level was tested in early July before a violent rebound returned the S&P 500 index to recent highs of the cyclical bull market. However, last week, prices reversed again and moved sharply lower, approaching the 200-day moving average for a second time.

The 200-day moving average is important long-term support and a confirmed break below that level would be a major bearish development, signaling the likely start of a substantial correction. While the S&P 500 index remains above that key level for the moment, the Dow Jones Industrial Average closed well below its 200-day moving average on Friday. A subsequent close below congestion support in the 17,500 area would confirm the breakdown and forecast substantial losses.

The Dow Jones Transportation Average broke below its 200-day moving average in April and this index has been trending lower since March.

When stock market indices negatively diverge in this manner, the behavior is yet another warning sign that a long-term reversal may be in progress. In isolation, this type of divergence is not a significant warning sign, but when combined with historic market risk andd eteriorating market internals, this price behavior is a meaningful development. As we often note, a cyclical top is a process, not an event, so it will be important to monitor market behavior closely during the next several weeks. If the S&P 500 index joins the Dow Jones Industrial and Transportation Averages in breaking below its 200-day moving average, the likelihood of a long-term reversal will increase substantially.

We will identify the key developments as they occur in our daily market forecasts and signal notifications available to paid subscribers. To receive our market forecasts and signals, login and then upgrade to a paid subscription.

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Empty Rhetoric: On the Work of Deirdre McCloskey
Men Without Work
News Blog
Adjusting To An Imperfect Reality
Employers Wise To Tap Into Older Workers Waiting On Retirement
Infographic Of The Day: How Seven Types Of Global Megacities Stack Up
Early Headlines: Asia Stocks Down, Dollar Up, Gold, Oil Steady, Senate Takes Russia Probe, Income - Tale Of 2 Countries, London Off. Values Face Big Drop, Russia Cuts Oil, Border Wall In Mexico?, And More
Documentary Of The Week: America Before Columbus
American Doctors: The Prognosis Isn't Good
Brexit: 'Leave' Voters Showing Most Signs Of Doubt
Crumbling Comet? The Great Debate About Whether Rosetta Rock 67P Is Breaking Apart
ISIS: Income Has More Than Halved Since 2014
What We Read Today 29 March 2017
The Best Hilarious Prank Ideas For April Fools' Day
February 2017 Pending Home Sales Index Improves?
The Need For Very Low Interest Rates In An Era Of Subdued Investment Spending
Investing Blog
Where In The World To Invest? A Search Of The Globe
Boom Or Bust: Tech IPOs Can Go Either Way
Opinion Blog
Scarborough Shoal: Will America Help The Philippines?
Why Did Preet Bharara Refuse To Drain The Wall Street Swamp?
Precious Metals Blog
Following The Yellow Brick Road
Live Markets
29Mar2017 Market Close: DOW Closes Down 42 Points, SP 500 Up At Close, Nasdaq Clearly The Winner Closing Up 0.4 Percent, Wall Street Investors Happy
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved