Health of the Market
The charts will be updated by
every Saturday. When no change to text, [NC] will be used. Click
for favorite investment websites. This site
is part of
Charlottesville's The Center at Belvedere Investors' Forum. Note:
If the latest date does not show here or
on charts, try
reloading the page or clearing cached images.
indicators for the equity market show a down
market within a transioning bull to bear cycle in a bull
trend, and in a bull market (see definitions on Longer
Term page). The plot of the advancing stocks less the declining
stocks on the
NYSE is falling, which means most of the stocks are going down. Click here to check it out.
The S&P 500 index closed down 2.93% for the week, after being down 0.16% the previous week. The
closed down 3.62% for the week, after being down 0.39% the previous
The small caps closed down 3.78% for the week, after being down 0.17% the previous week.
42.2% of S&P
500 stocks were above their 200-day exponential moving averages, down
from 52.8% the week before. 23.0% of these stocks were
above their 50-day EMAs, down from 43.2% the week before. 20.1%
Nasdaq stocks were above their 50-day EMAs, down from 30.1% the
before (see chart). The Bull
Cycle is transistioning to a Bear Cycle. The previous bull cycle started 3/17/2023. A VIX Sell Alert was
signaled on Thursday 9/22, and the Bullish-Percent Sell Alert occurred on Tuesday 8/8, both shown on the Market Status page. The Advance-Decline Sell Alert occurred on Thursday 8/17 as shown on the Longer Term page. Charts for the third
of the presidential cycle are shown on the Cycles page. September is usually the worst month of the year.
[NC] The 10-year Treasury yield is below the 2-year AND the
3-month yield, which is an inverted yield curve. This
generally precedes a recession. See more on the Income
page. The Power Zone,
the favorable time of the year, ended on August 2. The Power
Zone typically starts sometime
in October and
ends sometime in May. See the Market Cycles page for more.
Lance Roberts on 5/20/23 reminds us that over the next few years, the
environment will look different than in the past.
1. The economy is returning to a slow growth environment with a risk of recession.
2. Inflation is falling, meaning less pricing power for corporations.
3. No artificial stimulus to support demand.
4. Over the last two years, the pull forward of consumption will now drag on future demand.
5. Interest rates are substantially higher, impacting consumption.
6. Consumers have sharply reduced savings and higher debt.
7. Previous inventory droughts are now surpluses.
This website follows the markets and does not presume to factor in economic conditions. Buyer beware!
[NC] Market timing is discussed on the Observations
page -- does it work? Consider dollar-cost-averaging over a month or so to gain access to the market -- if you have missed the buy-low point.
three-month performance chart of the Nasdaq QQQ
exchange-traded fund is
below. QQQ delivers a mash-up of tech, growth and large-cap exposure
that excludes financial stocks. The fund and index are rebalanced
quarterly and reconstituted annually.
CNN Fear &
gives an interesting perspective on the internals of the market. The
trend of the components of this index are important to gauge the trends
of the market.
A measure to
determine if the price is too high relative to the underlying
earnings is the Shiller price to earning ratio. This is the current
price divided by the 10-year average of "real" (inflation-adjusted)
earnings. This ratio corresponds quite well to the peaks of price
as shown by charts on this site.
John Murphy of StockCharts.com asks "Why
look at charts?" - They provide the most up-do-date information on
state of the stock market. They may also be telling us something about
the fundamental reports we won't be getting until much later.
Charts track forward-looking markets, while fundamental data is
backward looking. It's always safer to look out of the front window of
your car while driving to see where you're going. Not the back window
that shows you where you've already been."
A chart from 1870 that shows the major market swings can be seen here.
Stock Market Action
The large-capitalization S&P 500
index is shown with its gray Bollinger
Bands below. The
bands are two standard deviations above & below a 20-day simple
moving average. When the price goes above or
near the edge of the upper Bollinger Band a downswing in
is likely as the market is overbought. Similarly, when the
price goes below the lower band, the market is oversold, and an
upswing is likely. The 14-day RSI is a measure of the price
momentum. Below 50 indicates negative momentum. A divergence
price is an indication that the price trend is likely to
Head & Shoulders Top has formed with a broken neckline that
indicates a drop to the next resistance level around 4190 is likely.
That is where the 200-day moving average is now. Traditionally the 6%
move from the July peak to the neckline means that a similar downside
move would be a minimum downside objective of around 4080.
[NC] From FibTimer.com:
Small-cap stocks, represented by the iShares
Russell 2000 Small Cap ETF (IWM), are not typically traded by computerized programs. They are
traded by individuals and as such offer us a look at what individual
investors are thinking instead of the big trading firms. Small caps
hitting a new low tells us investors are selling, continuously selling.
Not a good thing for the stock market looking forward.
summer action resulted in a Head & Shoulders pattern where the
neckline was broken on 9/19. The drop is likely to extend at least to
the support line shown.
technology-heavy Nasdaq composite index had a dramatic up move in early summer. The
move ended with a Head & Shoulders Top. If it breaks the neckline,
it would indicate a likely drop to the next resistance level below
(12250). The measured move would be to 12000.
exchange traded funds (ETFs) is popular. The traders rotate
between sectors. To see how some popular sector ETFs are
doing, click here for the Candle Glance of two-month
charts. The charts include the StockCharts
Technical Ranking (SCTR). The sector ETFs used in the Candle Glance
Here is a map of popular ETFs
arranged in significant groups. This
link gives gain or
in a week with a small chart when you hover over the group.
[NC] The international bond market is provided
by the WSJ. See the Income tab for a chart of U.S.
Treasury yields. 2020 ended with the 10-year treasury note at 0.93% and
the 2-year note yield was 0.13%.
stock markets in other countries can diversify a portfolio. To
participate in these markets, the U.S. dollar
can be hedged out. Click to check out the country hedged ETFs and the un-hedged ETFs.
Note that BSE SENSEX is an
India index, CAC 40 is France, FTSE 100 is a UK index, Nikkei 225 is
Japan, Hang Seng is Hong Kong, DAXK is Germany, and Shanghai is, of
falling dollar has a positive influence on the U.S. market, especially
large cap multinationals, as prices for our customers overseas are less
expensive. However, a weaker dollar makes product imports (some in
the supply chains) get more expensive. This has a negative effect on
dollar ($USD) and the 10-year Treasury rate ($TNX /10) are shown in a
chart with weekly closing prices. The earlier dollar rise peaked
2020. The quick 10.9% drop ended with a double
bottom in the spring of 2021. The huge 25.8% rally since then corrected with a 12.2% drop. Now a rally is underway.
10-year Treasury rate
rose to a peak on 10/5/2018 and 11/8/2018 closing at
times. It hit a low in March and August 2020 around 0.5%. Now it is on
a long-term rise.
Ed Yardeni in the 2/9/19 Barron's
stated that, based on his 40 years of experience, he has never found
that supply-versus-demand analysis helped much in forecasting bond
yields. It's always been about actual inflation, expected
inflation, and how the Fed was likely to respond to both.
Also shown is the CRB Commodities
Index, which is a measure of inflation. This index is an unweighted
geometric average of prices across 17 commodities including energy,
grains, industrials, livestock, precious metals, and
The price of gold
had risen dramatically until the 2-year pull-back. The gold
and silver miners ETFs (GDX and SIL) had gone up even more. Now the significant rise from the green arrow is consolidating.
The Federal Reserve controls the Federal Funds
Rate, which is the interest rate at which banks lend reserve balances
to other depository institutions overnight on an uncollateralized
basis. It also tends to effect longer-term rates. On 3/15/2020 an
rate cut set the benchmark interest rate between 0% and 0.25%. Now the
Fed is raising the rate as shown in the chart.
chart below gives an overview of the
situation. The market had done well since the termination of the QE3
Fed bond buying, until the last half of 2015. The 10-year
Treasury rates moved down as the Fed raised the over-night Federal
Funds Rate in December 2015. There were a total of nine 1/4 point
rate increases, the last one in December of 2018. The Fed cut the rate
at its July 2019 meeting, and more cuts followed as shown below. In May
2022 the Fed started to raise the rate to slow the economy to fight
various Treasury yields
since 1962 are shown on the Income tab.
The source of the
charts is located on the upper right of the chart. This page
is for amusement only, and should not be taken as advice to buy or sell