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On to charts: Last weekend in “Misconceptions” we outlined the imminent downside risk this market was facing and provided the rational why we closed remaining long positions. On the public stream we made it no secret that we went short the market into new highs on Monday and it was a great week as price indeed followed through to the downside. The question is now what?
I’ll get into details in this coming weekend chart’s segment, but as yesterday marked the close of another month the resulting monthly charts are worth highlighting here. Now whether one is bullish or bearish one has to be factual on some level or another to be a successful trader.
And factually, it is the monthly charts that are scarily bearish. Now we are still close to all time highs on the $SPX, but when an index like the $IWM takes out 10 weeks of price discovery in just one, I think it’s fair to say one better pay attention:
Small caps are clearly majorly short term oversold, and nothing suggests trends have changed but for now here are some select monthly charts that raise major structural concerns.
$NYA: Dirty rejected high with negative RSI and MACD divergence:
$RUT: Dirty rejected high with negative RSI and MACD divergence:
$SPX: Triple high rejection, still in trend, but negative MACD and negative $BPSPX divergence:
The scariest chart of them all: The $WLSH as it has all the elements of past major market tops:
Stay tuned for more in depth analysis this weekend.