|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
October 21, 2019
Stock Market: a downside test of the trading range could be possible.
Preview from my weekly report*
Our asset management clients have made significantly positive absolute and relative returns while taking much less risk. We offer complete transparency, anytime access to your funds, and low fees. You keep control over your money. See: ColbyAssetManagement.com
The short-term outlook calls for caution, after stock prices broke down below the previous 2-day lows on Friday.
All of the stock price indexes face formidable upside chart resistance near previous 2019 highs. That would be the 3008 to 3028 zone for the S&P 500 index.
Last Thursday's high for the S&P 500 at 3008.29 very well could have been the termination of an 11-day up wave. Next week's price action will confirm or deny that interpretation.
Historically, seasonal tendencies for the week ahead suggest a choppy stock market. Seasonal tendencies can be overwhelmed by news headlines.
Stock market sentiment indicators are mixed for the short-term.
The S&P 500 is systematically bullish for the long term, because price is above both the rising 50-day and the rising 200-day Simple Moving Averages (SMA), and the 50-day SMA is above the 200-day SMA. Of course, trend following using moving averages always lags at price turning points.
Easy monetary policies of the global central banks have been and remain bullish for markets.
The economic backdrop is not helpful. Actual economic reports have been weaker than economists' expectations. It is clear that the global economy has slowed considerably, especially trade and manufacturing. The Conference Board's Leading Economic Index turned down after September, 2018, and the Consumer Confidence Expectations Index fell sharply to the lowest reading since December, 2018.
Stock valuations are relatively high.
Investment selection continues to make a significant difference. The LargeCap, S&P 500 stock price index ETF (SPY) is only 1.54% below its 52-week high, but the following index ETFs are underperforming and bearishly diverging: BRIC (BKF) 6.84% below its high, Emerging Markets ETF (EEM) 6.38% below, Dow-Jones Transportation (IYT) 5.89% below, SmallCap (IWM) 5.28% below, and MidCap (MDY) is 2.83% below its high.
Long-term U.S. stock sector rotation continues to be dominated by the outperformance of the Defensive sectors, indicating investor caution about long-term economic prospects. The following best-performing sectors are demonstrating the greatest trend strength: Real Estate, Utilities, Technology, Consumer Staples, Consumer Discretionary, and Communication Services.
Meanwhile, the following Cyclical sectors remain relatively weak for the long term: Energy, Health Care, Industrial, Materials, and Financial. With the exception of Health Care, which normally is Defensive, Cyclical sectors tend to rise and fall in anticipation of the ups and downs of the general business and economic cycle.
Foreign and Emerging stock markets rallied over 11 trading days through Thursday, and rose above both 50-day and 200-day SMAs, probably helped by hopes for trade deals (China, Brexit). Longer term, both have been weaker than U.S. stock indexes over the past 2 years. The 50-day SMAs remain below 200-day SMAs, keeping both no better than systematically neutral for the long term. Foreign markets fell to their lowest prices since last January in August. These markets are important because they have led the U.S. stock market at important price turning points in recent years.
U.S. Dollar ETF (UUP) fell below its rising 50-day SMA on 10/16/2019 turning systematically neutral.
Gold (GLD), Gold Miners (GDX), and Silver (SLV) prices remain systematically neutral for the short term, below their 50-day SMAs. All three remain above their rising 200-day SMAs, suggesting a short-term correction phase only.
Copper (JJCTF) price remains systematically neutral above its rising 50-day SMA. Copper remains below its falling 200-day SMAs, suggesting a short-term correction phase only. The price of Copper is sensitive to prospects for global economic growth.
Oil (USO) remains systematically bearish below its 50-day and 200-day SMAs and with the 50 below the 200.
U.S. Treasury bonds (TLT) and notes (IEF) prices remain systematically neutral for the short term below their 50-day SMAs. Both remain above their rising 200-day SMAs, suggesting little more than a short-term correction phase.
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)
Objective Quantitative Rankings for hundreds of Exchange Traded Funds
Now is the time to take action. Preserve your capital by placing your assets under our careful management--before the next major bear market of -20% to -50% devastates most portfolios.
Make no mistake, the ongoing global economic and financial crisis has not been fixed by any sound or lasting solution. History shows that the authorities will not protect you or give you any advance warning--but we will.
If you agree that making money while staying safe is better than taking big risks in the stock market and exposing your nest egg to potentially ruinous losses, we would be very happy to implement our time-tested strategies for all of your assets. It makes good sense to choose protection--especially at this time when the financial world is stretched out of proportion.
We are always happy to discuss your goals and concerns and answer all your questions.
Call us now for a free consultation.
by phone: 646-652-6879
or by email: firstname.lastname@example.org
*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report --
This Technical Analysis is made possible by use of MetaStock software. Try it at no risk. (Check out the great new version XVI released May, 2018) Click this link to save 9%-10% on MetaStock® software.
11-Year Outperformance by the
Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
Please note that my ETF rankings are available by subscription--NOW WITH A NO-RISK FREE TRIAL.
See The Colby Global Markets Report (click here).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
My latest book was named one of the top investment books by Stock Trader's Almanac 2005. This book also received an excellent review in the November 2003 issue of Futures.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MetaStock® PC Software for Technical Analysis
MetaStock® is a powerful technical analysis software program for your personal computer. It offers more than 200 built-in indicators and line studies to enable you to explore a wide variety of methods. And it empowers you to build, back test, and optimize custom trading systems to suit your own particular requirements.
Click this link to save 9%-10% on MetaStock® software.
Or, click the banner below for a one-month free trial.
My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
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.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Trading and investing involve risk of significant loss. Your use of this site means that you have read, understood, and accepted my Disclaimer.
Syndicate content on these pages