Charting the Markets: S&P 500 Stumbles Despite Strong Earnings
Stocks have adjusted downward as a new month got underway.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Just when you thought the action would turn bullish following some very strong earnings this past week, the bears gave the bulls a quick "shakedown" and told them to remember about being humble.
For several weeks the bulls have been in charge and shown some bravado in the process, but there is no disputing how bearish the action was this past week. Could this be the start of even more bearish activity taking the markets even lower? It's very possible but there are a few possible outcomes.
The price chart remains bullish, the candlesticks are blue which means bullish on the GoNoGo composite of indicators. There is little disputing the evidence of bullish leadership even after a miserable week, so we should remain bullish until that trend changes to bearish colors (pink, purple). MACD remains on a buy signal, money flow is bullish and momentum (stochastics) remains robust.
The price is right on the bottom of the channel drawn in on the top of the chart. A move down this week or next is bearish but we are nearly oversold, so a bounce is likely. We'll have to see what the quality of that bounce is.
So, why fret here? Seasonal trends are not bullish here and moving into the fall, things start to get dicey. But with the bullish trend already in place, perhaps the bears need to give the market bulls a modest scare. It will take quite a bit of poor price action and time to dismantle the current rally. This past week saw a few days of distribution, which if they cluster up could be a sign of a trend change. For now, the benefit of the doubt goes to the bulls, but we'll watch carefully.
