US Markets:- Review
Earlier this year the 27th of January to be exact, FP markets reported the potential breakdown in the US index’s.
These are the comments here :-
During the morning webinar the support level of 17500 has been discussed for the past 3 weeks. This level is the critical line to be held into the close of the week. This reporting season will be made transparent on exchange rates versus growth.
This daily chart of the DOW shows the 3rd retest of the lower pennant line, this pattern is now setting up to break out. The primary trend is UP. ( Weekly) A break below this level would see the 200 day average @17,000 tested as it has been many times in the past. Next support at 16,700.
From these comments the DOW went on to make a new high, however the DOW TRANSPORTS continued on into decline from the January high and set a lower high in February.
This is also confirmed with the continuing fall in the RSI indicator.
This post was followed by the 21st of April 2015 observation.
You have heard the saying “where the Transports go”,, “so goes the DOW.”
The Transports Index has a small inverse head and shoulder pattern at the support level of 8600.
This support level has been in place for 6 months and looks to be strong as evidenced by the long shadows
in DEC-14 , JAN-15 and FEB-15.
So the picture is very clear, a breakdown below this level would set up a new Bear market.
This Inverse head and shoulder pattern is setting up a retest of the Resistance at 9220 points.
This chart shows the continuing weakness in the Transports and the RSI now below “50”.
So where too from here? The DOW and the Transports are now in a Bear Trend.
US interest rates are remaining low possibly into Christmas, wages growth is benign.
Inflation and GDP growth are the key elements in this equation, and will continue to weigh into the weakness in the US equities market.
This half year GDP chart shows the stalling of growth from 2013 and 2014.
Continue to monitor the FP research for further updates.