Now -- on to the show.
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Notice the following on the yearly chart in daily increments:
-- Prices were moving lower until September, but the rate of decline was far more gentle compared with the post-September situation
-- Once prices made a move through the 115-120 area they dropped hard and fast. Note the increased volume during the second wave of the sell-off
-- Now prices are in a downward sloping channel
-- Prices are 28% below the 200 day SMA, indicating we're deep in a bear market
-- The shorter SMAs are below the longer SMAs
-- All the SMAs except the 10 day SMA are moving lower
-- Prices are above the 20 day SMA and rallying
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Notice the following on the yearly QQQQ chart in daily increments:
-- Prices consolidated in a triangle pattern until September. Once prices broke through the lowest trend line they dropped hard
-- Prices have dropped 33% since they moved below the triangle consolidation
-- Prices are currently in a downward sloping channel
-- Prices are 31% below the 200 day SMA
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices have rallied through the 10 day SMA and face upside resistance from the 20 day SMA, but this upward movement has not had an effect on the SMAs yet
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Notice the following on the yearly chart of the IWMs (the Russell 2000) in daily increments.
-- The 65 level was extremely important to this average. Once prices fell through that level it was Katy bar the door time.
-- Prices have fallen 27% below the 200 day SMA
-- The shorter SMAs are below the longer SMAs
-- All the SMAs are moving lower except the 10 day SMA
-- Prices have rebounded to the 20 day SMA
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Above is a chart of the transportation average in daily increments. Notice the following:
-- The lower 80s were a very important technical level. Once prices moved below this level they dropped really hard and fast
-- Prices are currently in a downward sloping triangle
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Although prices have rebounded that rebound has not had an impact on the SMAs yet
Below are the breadth charts for the NYSE and the NASDAQ. Notice that none of them are good. In fact, they are all in a clear downtrend and indicated we're probably moving lower. Please click on all of them to get a larger image.
Finally, notice the rapid rise in the short-term (1-3 years) of the Treasury market. As traders have pulled out of the stock market they have moved into the safe areas -- the short-term Treasury market
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Bottom line: All the averages are moving lower. They are each showing classic signs of a bear market (bearish SMA perspective, lower prices, downward sloping trends). The transportation average is also in a downward sloping channel, confirming the bigger trend. Market breadth is clearly negative and money is flowing into the Treasury market. I think we're going lower.
