U.S. Equity Indices Remain Bearish, Rallies To Be Sold

With the markets becoming more volatile and in a bearish formation, I thought I would provide a quick update on the U.S. financial markets.

Within the context of a bear market decline, a counter-trend rally of 1-3 days is normal, and if it is only 1-day, it shows that supply is coming in and reversing that move quickly.

I don’t expect Monday’s short-term reversal to gain much strength, and will be looking to add to shorts on any rallies.

The daily charts of the major U.S. stock market indices that I regularly review are all with downward sloping regression trend channels, and more weakness is expected.

S&P 500 Futures Chart

s&p 500 index futures trading downside price target chart

Nasdaq 100 Futures Chart

nasdaq 100 futures trading downside price target chart

Reviewing the relative performance of the momentum factor ETF (MTUM) vs. the S&P low volatility ETF (SPLV), I see that the trend remains in a very weak position for MTUM.  We expect further weakness.

Looking at the iShares T-Bond ETF (TLT), I think it will eventually take out the 2018 low, around 112.  On the opposite side of the ledger, we have the 10-yr. yield with an initial target of 3.03%, followed by an intermediate-term target of 4.29%.

The U.S. Dollar Index (DXY) has exceeded our MFU target of 101.60, which has us move our work up to the monthly timeframe. We are expecting the index to eventually break out above the 2016 and 2020 highs.

Twitter: @GuyCerundolo

The author or his firm have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

Sign up for our FREE newsletter
and receive our best trading ideas and research