|technical analysis, trading systems, investing, market-timing methods, stock market, money management
Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
July 22, 2019
Stock Market: technical trends turn down from resistance, and substantial risks remain.
Preview from my weekly report*
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The stock market trend appears to have been repelled from a red line of technical resistance extending back 18 months. Current global political and economic backdrops appear to pose significant risks to the still bullish majority of investors. And numerous technical divergences add to the risks.
Sentiment indicators appear overbought.
Historically, seasonal tendencies show that stocks generally have turned mixed after the first 2 weeks of July.
Investment selection continues to make a difference. Although the LargeCap, S&P 500 stock price index ETF (SPY) is now only 1.32% below its 52-weeks high, the following index ETFs are underperforming and bearishly diverging: SmallCap (IWM) is 11.29% below its high, Dow-Jones Transportation (IYT) is 8.91% below its high, MidCap (MDY) 5.70% below, Foreign Developed Markets (EFA) 5.24% below, Emerging Markets ETF (EEM) 4.88% below, and BRIC (BKF) 4.12% below.
Long-term U.S. stock sector rotation continues to send a mixed message. Both defensive and cyclical sectors are demonstrating the best trend strength: Technology, Real Estate, Consumer Discretionary, and Utilities sectors are strongest.
Meanwhile, the following sectors are relatively weak for the long term: Energy, Health Care, Materials, Industrial, and Financial.
Foreign and Emerging stock markets remain substantially weaker than U.S. stock indexes. Foreign markets are important because they have led the U.S. stock market at important price turning points in recent years.
The U.S. Dollar has been fluctuating erratically in a medium-term trading range for nearly 2 months since peaking on 5/23/2019.
Gold (GLD) jumped up to new 5-year highs on 7/18/19. GLD remains systematically bullish. Gold Miners (GDX) also are bullish. Silver (SLV), which had been lagging, jumped up to new 12-month highs on 7/19/19 and is likely to turn systematically bullish in days ahead.
Oil collapsed below 4-week lows and now is in a short-term downtrend. Oil turned systematically bearish for the long term.
U.S. Treasury bonds remain systematically bullish for the long term. Investors switch from stocks into bonds when they lose confidence.
The full report offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
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Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
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