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technical analysis, trading systems, investing, market-timing methods, stock market, money management *www.robertwcolby.com* 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

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	*June 21, 2021* *Stock Market Outlook: weak technical indicators suggest caution* Preview from my weekly report* Our asset management clients have made significantly positive 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* Relatively weak technical indicators have been signaling diminished bullish power and growing weakness. Some now are suggesting a medium-term downtrend for the stock market. Stock prices turned down last week after news that the Federal Reserve revised upward its estimate of inflation to 3.4% this year, compared to its previous 2.4% estimate. In addition to "higher and more persistent" inflation, the Fed now expects rising interest rates starting next year. Investor sentiment indicators have warned of bullish complacency and unsustainable overbought Greed for many months. A substantial majority of bulls implies potential vulnerability to a downside stock market price reversal or sideways correction/consolidation. Economically sensitive commodities, such as Copper and Lumber, topped out six weeks ago and have turned weak. A growing number of investment strategists suspect that we may be near the peaks of government monetary and fiscal stimulus, favorable economic and corporate earnings comparisons, and investor sentiment. If these peaks are indeed behind us, then more normal, two-way, up-and-down stock price action, with more typical 5%-10% downside corrections, very well might lie ahead. Probable Potential Reward appears less than Probable Potential Risk for the stock market. Stock prices have run far ahead of quantifiable reality. Stocks are overbought and overvalued relative to traditional measures: sales, earnings, dividend yields, and book value. Stocks are priced for an extremely optimistic future, ignoring all potential bumps in the inherently unpredictable road ahead. History shows that overly high stock prices are followed by low returns, and overpaying for stocks is not profitable. The SPDR S&P 500 ETF Trust (SPY) fell 2.22% last week for its largest decline in 4 months. Most technical indicators confirmed the weakness. Leading technical indicators, RSI, MACD, and On-Balance Volume have been and remain significantly weaker than price. Relatively weak technical indicators suggest diminished bullish power. The 50-day SMA (simple moving average, now at 416.00) had been providing support on price dips, but it was violated on Friday, signaling a medium-term downtrend. The many traders who rely on the 50-day SMA will be expecting further price declines. The QQQ Nasdaq 100 ETF (QQQ), which is heavily weighted by Technology stocks, rose to a higher high on Thursday. QQQ significantly outperformed the S&P 500 ETF last week, possibly suggesting a change in investors' preferences. Leading technical indicators, RSI, MACD, and On-Balance Volume did not make higher highs, so they continue to lag price, thereby demonstrating bearish divergence against price. Relatively weak technical indicators suggest diminished bullish power and the potential for price weakness. The Russell 2000 ETF (IWM), which is composed of relatively small-capitalization stocks, continued to underperform the SPY last week, as it has since 3/18/2021. IWM price broke down below its 50-SMA on Friday, signaling a medium-term downtrend. On-Balance Volume, a leading indicator of price, fell to its lowest level since March. RSI and MACD short-term momentum oscillators turned down, confirming the price downtrend. Both the Dow Industrial and Transportation Averages peaked on 5/7/2021, and both broke down below 50-day SMAs and their May lows last week, signaling significant weakness relative to SPY and medium-term downside corrections. Leading technical indicators are bearish. The Percentage of S&P 500 stocks above their own trailing 50- and 200-day SMAs peaked in April, and so these breadth-momentum indicators have been diverging bearishly relative to the price of the S&P 500. The majority of the S&P 500 stocks are now below their own trailing 50-day SMAs, which is a sign of developing broad market weakness. The Cumulative Daily Advance-Decline Line fell to a 3-week low last week. That drop was the largest decline since early May. Still, the A-D Line remains stronger than most of the other technical indicators. Holding consistently above its 50-SMA since early November, the A-D Line has been an accurate indicator of the stock market uptrend. At this point in time, the A-D Line is not yet confirming a substantial downside correction for the stock market. Net New Highs fell below its 50- and 200-day moving averages, signaling a move toward a bearish trend. Net New Highs peaked on 5/10/2021 and failed to confirm new highs for the S&P 500 this month. Dr. Copper, a top economic forecaster, fell sharply last week to its lowest price level in 2 months. Copper broke down below its 50-SMA. The technical indicators have been and remain weaker than price, which is an unfavorable sign because they tend to lead price. Copper appears to have topped out, and so the economy very well may be topping out as well. Lumber price broke down below its 50-day SMA (simple moving average, now at 1271.34) on 6/7/2021 and continued to decline 9 out of 10 days since. Lumber is confirming a bearish trend change for the medium term. RSI, MACD, and On-Balance Volume are leading indicators of price, and they remain weaker than price, which is evidence of bearish divergence. Lumber Bulls have been looking forward to continuing robust demand for new houses, spurred by abundant money printing, low interest rates, pent-up demand, and expectations of further rapid inflation of house prices. The chart of Lumber appears to be telling us that the peak of this optimism has passed. *Our full report reviews indicators that we monitor every day and 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. Please contact Bill Anderson by phone: 646-652-6879 or by email: anderson@colbyassetmanagement.com For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report -- click here. This Technical Analysis is made possible by use of MetaStock software. Try it at no risk. (Check out the great new version XVII released November, 2019) 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 250 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 Email Colby about his Custom Research, Analysis, Trading Systems Development, and Investment Strategy Consulting Services. Subscribe to The Colby Global Markets Report *MetaStock®* technical analysis software powers this technical analysis. SAVE 7%-9% by ordering here. Great new version just released November, 2019. Preview Colby's Latest Book: *The Encyclopedia of Technical Market Indicators*, Second Edition, 2003. Dow Theory Analysis Gann Angles Analysis Update on EMA Crossover Signals Money Management Rules How To Become A Top Trader. Ranking Indicator Performance to Maximize Profit by using "Annual Relative Advantage". Ranking Indicator Performance by the "Profit/Loss Index". Robert W. Colby, CMT, is a consultant to institutional and private investors and traders, providing regular analytical reports, custom research services, and trading systems tailored to clients' objectives. Clients include the most successful traders and investors in the world. Robert is the author of The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill, 2003, which has become the standard reference for indicator and trading systems design. Previously, at several large Wall Street firms, Robert worked as a proprietary trader, technical analyst, and fundamental analyst. He also was adjunct professor at New York University and New York Institute of Finance, where he developed new courses on technical analysis and market timing. Robert W. Colby is a Chartered Market Technician (CMT), an accreditation granted to members by the *CMT Association (https://cmtassociation.org/)* after demonstrating professional competence and ethics over a period of many years. Robert has been a member since 1980, and he strongly supports the CMT Association's high standards. He also supports the *The Technical Analysis Educational Foundation (https://www.taeducation.org/about/), which works to have technical analysis included in the curriculum of major business schools. "Robert W. Colby is America's foremost authority on testing market indicators." --Bill Meridian, top-ranked investment analyst and international fund manager, www.billmeridian.com Please click here to contact Colby directly. Privacy Policy: Your privacy is important to us. It is strictly against the policy of this website to employ spam, popups, ad ware, or spy ware. Copyright © 2000-2021 by www.robertwcolby.com. All rights reserved. Except as permitted under the United States Copyright act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of the publisher. However, quotations are permitted, provided that full attribution is given to: www.robertwcolby.com* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ranking ETFs "Robert Colby has evolved a system that, while hardly foolproof, is pretty clever," wrote Daniel Fisher, "Surfin' ETFs", *Forbes, Investment Guide, Special Issue,* June 4, 2007. Please click here to view this article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTERVIEW of Robert W. Colby in *Technical Analysis of STOCKS & COMMODITIES* magazine, December 2006 issue. Please click here to view this article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "Gold's next move: History, logic, and intermarket relationships. See if testing gold's relationship to different markets over a 32-year period provides possible trade signals for the yellow metal." by Robert W. Colby, CMT. Please click here to view this article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "Which gold indicators are best? Divining gold's next move." by Robert W. Colby, CMT. Please click here to view this free article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "Applying the Relative Strength strategy to ETFs." by Robert W. Colby, CMT. Please click here to view this free article.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "PUTTING CANDLES TO THE TEST, How Profitable Are They Really?" by Robert W. Colby, CMT. Published in *SFO, STOCKS, FUTURES AND OPTIONS MAGAZINE, Volume 5. No. 8. August 2006, pages 91-94. Please click here to buy this article. (Scroll to bottom of linked page.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TradingMarkets.com* interviewed Robert W. Colby, CMT. View the entire interview online. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *Active Trader* magazine September 2004 interviewed Robert W. Colby. 4 pages. "Robert W. Colby: Technical collector. A discussion with Robert W. Colby about technical trading and his revised *Encyclopedia of Technical Market Indicators, Second Edition. By Active Trader Staff." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For information about methods* that would have *performed substantially better* than systematic trend-following in back-testing simulation dating back 32 years, email me by clicking on the following link: Please click here to contact Colby directly. Click here for a simulated performance graph of one of my trading systems applied to a stock price index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. Great new version just released November, 2019. Click this link to save 7%-9% on *MetaStock®* software. Or, click the banner below for a one-month free trial.