The S&P 100 continues to move higher. We have a clear pattern of lower lows (A) and lower highs (B). Also note the price EMA picture which is bullish -- all the EMAs are moving higher, the shorter EMAs are above the longer EMAs and prices are above all the EMAs.
In contrast:
A.) Prices formed a double top with the first top at the end of September and the second top at the end of October
B.) Prices fell to the 200 day EMA
C.) Note the bearish orientation of the shorter EMAs -- the shorter EMAs are below the longer EMAs, prices are below all the EMAs and all the shorter EMAs are moving lower.
In other words, big stocks have a bid and small stocks don't.
1 comment:
Even though big stocks are doing better, both charts are showing negative signs. That S&P chart is going up still but it's definitely slowing down. My sense is we're entering phase two of the turnaround right now.
Phase one was basically about using a lot of government money and aggressive fed policy to try to put a floor under the economy. The result has been, at the least, a slow in the free fall that started a little over a year ago. Now we are seeing nervousness show up in the charts again because we're moving to phase two.
Phase two is basically where the rubber meets the road. Did all of our aggressive policy action actually turn this around or just slow down a collapse that still continues? While there are many good signs and the economy is technically growing now, what remains very unclear is how sustainable this is.
If the economy is still ultimately weak, it is smaller businesses that are most at risk, thus the Russel reading worse. It reflects a shifting mentality of looking desperately for any positive sign in the economy to questioning how positive those signs really are.
So we're in a holding pattern for right now. I suspect that we'll be there until we get a good read on how the holiday shopping season is going.
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