Our Market Forecast indicator is showing bearish postures on the NASDAQ 100 INDEXNASDAQ: NDX and the Russell 2000 Index INDEXRUSSELL: RUT and lost its strong bullish trend on the S&P 500 Index INDEXSP: .INX.
The recent short-term sentiment rally that began late last week and continued with a strong intraday gap fill on Wednesday has not been strong enough to halt the bearish momentum… so far.
The Directional Movement Index is showing cracks in the S&P 500 that suggest more of an intermediate decline is on its way. Also, today’s buying was not enough to alter the declines in both the MACD and Stochastic indicators that are still below their own respective moving averages.
Yesterday’s open started out with the potential for a new bearish runaway gap lower but after a strong early battle between bulls and bears, the bulls pushed to fill in the early gap. Volume, volatility and trading range suggest today’s move has bearish implications despite the close off the intraday lows.
Inflation continues to be an issue effecting different asset classes. Gold and commodities remain strong after Tuesday’s bullish breakout move in the EUR/USD. Also, bond yields are starting a new run that, recently, has been bearish for equities. Inflationary environments tend to have stocks AND bonds moving it the SAME direction – either to the upside or downside.
Technology, Consumer Discretionary and Communication Services are starting their own bearish intermediate postures with the other cyclical sectors looking to be a LOT more bearish and entering their own downward cycles.
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