Wall Street down for the ninth consecutive session last Friday, in a string of red not seen since the depths of the 2008 financial crisis.
Yet, despite the bearish outlook for the market the underlying economy is showing signs of strength as strong labor demand is boosting hiring and rising wages. But this could also tempt the Fed to hike its discount rate sometime this December, a prospect that gives the market the jitters.
Check this DOW chart [INDU] and note that all about this index is bearish. Not only is this index performing an impressive nosedive, but the Moving-Average lines configuration [red line below the green line] is heading for the bottom as well. The RSI strength indicator and MACD momentum bars are both in their respective bearish territories, which will only accelerate this selling squall.
So, it's going to be interesting to see who of these two U.S. presidential candidates can spark a reflex rally in the days ahead.
This large-cap index [SPX] paints a bearish picture of the market as well. Not only is this index in a freefall, but the MA lines configuration is also bearish with the red line below the green. The MACD momentum bars are stuck deep in bearish territory, and so is the RSI strength indicator.
Just like other major indexes, NASDAQ [COMP] has turned totally bearish with the red line crossing below the green. The MACD momentum bars and RSI strength indicator have slipped deep into their respective bearish territories, which adds to the negative sentiment that has engulfed the market.
The small-caps [SML] and mid-caps [MID] are extremely bearish from top to bottom, and that doesn't look good for the bulls in this game. One has to wonder if the U.S. presidential election has something to do with that.
This discretionary sector [XLY] of the market appears to have given up its ghost. Besides the steep nosedive of this index the MA lines configuration is sharply bearish below the green, while the RSI strength indicator and MACD momentum bars are at the bottom of their respective bearish territories.
Without the support of the discretionary index this market will have a tough time maintaining a sustained rally.
The market's fear index [VIX] is rallying strongly with all its components in their respective bullish (??) territories, and that surely is bearish for the market.
Investors' confidence in this market [XIV] remained fairly bullish between early August and early November when the red MA line crossed above the green. Usually, that makes for a bullish market. But this time, with the RSI strength indicator and MACD momentum bars stuck deep in there respective bearish territories, the bull may have to wait a while longer.
The bull in this game [SPXL] sure looks like a bear. While this index is nose-diving, its MA lines configuration remains sharply bearish with its red line below the green.
At the same time, the RSI strength indicator and MACD momentum bars are deep in their respective bearish territories, and that will put a lid on any rally attempt
For the first time in eight years the bear [SPXS] finally turned bullish This index rallied strongly and so did the RSI strength indicator and MACD momentum bars, both of which are in their respective bullish territories.
Most importantly for the bears, the MA lines configuration for this index has turned positive when the red line crossed the green line last September. But will this bear-rally last? That may depend on the outcome of the U.S. presidential election.
If Clinton wins, the market rallies. If Trump wins, the market sells off.
The yellow metal (NASDAQ:GOLD) continues its rally mode while being well supported by the RSI strength indicator and MACD momentum bars, both of which are in their respective bullish territories.
But for as long as the MA lines configuration remains so extremely bearish [Large gap between the red line below the green line] gold remains vulnerable to a sharp selloff.
OIL [WTIC] continues its steep nosedive which was triggered by this index's double top last October. Although both the RSI strength indicator and MACD momentum bars have declined deep into their respective bearish territories, for as long as the red MA line stays above the green line, oil's bias remains poised to the upside.
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