Of particular note is the negative money flow units that are underway for the U.S. market. Most of the downside targets are coming in at -15% to - 20% from this years highs. The European markets remain very weak as does the Hang Seng and China. The Nikkei has developed a negative money flow unit this week.
Momentum has weakened considerably for the Nasdaq Composite, Russell 2000 and teh Mid-Cap index, (MDY). Each of these indices are at their intermediate to long-term channel support areas. The S&P 500 has held up much better.
Spain’s IBEX remains in a strong well defined downtrend and Italy’s FTSE MIB remains very vulnerable to a significant leg lower as momentum continues to weaken.
WTI Crude Oil remains on target for a move into the $75—$77 area. Nat Gas have finally rallied above a key area where the odds are high for another leg up.
Although the uptrend in the Nasdaq Composite and Russell 2000 remains intact, both indices have stalled at the upper end of their intermediate-term channel. The Dow Transports continue to find resistance in the 10900 area and look poised to pullback short-term.
We created an equal weighted index of the Pharmaceutical, Medical Devices and Biotech groups which looks very bullish. We highlighted a number of long ideas in yesterday Global Health Care report.
Both the MDY and Russell 2000 continue to be the stronger segments of the market, but the RUT is now at the upper end of it 2 1/2 yr. channel which is resistance.
The Nasdaq Composite continues to stall at our long-term target area, and momentum continues to weaken. The Semiconductor ETF - SMH has been carving out a top pattern for a number of months as it trades around our target of $102. It has just started to break a 2-year uptrend and the monthly MACD - momentum indicator has crossed. We would be reducing exposure.
WTI Crude Oil has picked up bullish momentum and on target for $75—$77. After consolidating for a month, the XOP has broken a near-term downtrend and looks poised for its next leg higher.
Some observations since our prior report: The Nasdaq Composite maintains its long-term trend but has yet to have a weekly close above 7700. The U.S. Dollar and Euro are at important inflection points while the GBP is expected to continue lower.