Stock Market Indexes Topping?
Well, that was fast. The stock market pullback has been sharp and likely is not over yet.
Last week, I shared the same chart, calling it a “moment of truth” for the stock market. Would the 3 underperforming stock market indexes (in the lower half of the chart) bring down the outperforming 3 indexes (in the upper half).
Dow Jones Industrial Average INDEXDJX: .DJI, S&P 500 Index INDEXSP: .INX, Nasdaq 100 INDEXNASDAQ: NDX versus the Russell 2000, Dow Transportation Index, and S&P Mid-Cap Index.
So far, the answer is yes. Well, at least the under-performers have helped to bring about a sharp pullback.
BUT the question now is: Will the underperfomers drag the broader market into a correction… or perhaps a bear market?
Let’s look closer at the chart above.
As you can see, each of stock market indexes in the upper and lower half are testing critical up-trend support at (3). Bulls need these price areas to hold.
If support at each (3) breaks, bearish messages will be sent after small, mid and transports sent a bearish divergence message of late.
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
