Market Analysis

Monthly Charts

Near the December lows markets were vastly oversold and deeply disconnected, a rally into early 2019 made perfect sense. Seeing MA reconnects, alleviate oversold conditions. The question was always: Was December a major low or was it going to be a major counter rally in context of an emerging bear market. The answer remains untested as the rally remains untested. But as we close another month here it’s good to keep an eye on the larger picture charts and monthly charts can give one good perspective.

Below are some select monthly charts of various indices, and they all amazingly send a similar message: Price has relentlessly moved higher to retag the bull market trends that were broken in December 2018.

These trends have not been recaptured, but they partially explain why indices at least paused the advance on Monday: Trend line resistance.

Now what bears want to see is a rejection of these trend lines and a presumption of a down trend. What bulls want to see is no new lows and dips being bought to target new highs. And let’s be clear: New highs are absolutely necessary or bulls may be facing major topping patterns. And bears? Well, they ultimately need new lows. Anything in between would be an inside year with any larger decisions moved into 2020.

Nothing wrong with an inside year by the way, it provides plenty to trading range opportunities.

As these are monthly charts they speak to larger structures and they inform what’s at stake going into March and April.

The bull trend line is rising steeply and to recapture the trend line will take more and more effort, especially a sustained recapture. Hence March/April shall prove interesting and perhaps we’ll see volatility make a comeback.

For your viewing pleasure:

$SPX:

$SPX longer term:

$OEX $S&P 100:

$NDX:

$WLSH/$BKX:

$XLI Industrials.


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