1.) The clear downtrend that started about 11 AM and continued for the rest of the trading day.
2.) The market sold-off at the end of the day on big volume.
3.) All three simple moving averages (SMAs) are moving lower and the short-term averages (10 and 20 minute SMAs) are lower than the 50 minute SMA. Both of these factors are bearish.
Here's a 7-day chart that goes back to Monday of last week. Notice we're right where we started last week.
Here's another way to look at the chart. The last 7-days are a triangle consolidation pattern. This could mean that prices are ready to move strongly in one direction or another. The big question is which direction.
Finally, here's the daily chart, which looks terrible. The 10, 20 and 50 SMAs are all moving lower. The shorter-term SMAs are below the longer SMAs, strongly indicating a further downtrend. The index closed below the 200 day SMA pretty decisively. Bottom line -- this chart stinks for anyone going long.
2 comments:
Hey Bonddad: Love your site, my guilty pleasure at work everyday.
Anyway, you must be too busy to have missed this headline in the Financial Times today but I think your readers would love to comment on this.
Take a look,
RS
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Learn from the fall of Rome, US warned
By Jeremy Grant in Washington
Published: August 14 2007 00:06 | Last updated: August 14 2007 00:06
The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.
David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.
These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.
Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.
“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”
Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.
While most of its studies are commissioned by legislators, about 10 per cent – such as the one containing his latest warnings – are initiated by the comptroller general himself.
In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with”.
“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.
“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.
The fiscal imbalance meant the US was “on a path toward an explosion of debt”.
“With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr Walker, a former senior executive at PwC auditing firm.
Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path”.
“Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”
Mr Walker said he would offer to brief the would-be presidential candidates next spring.
“They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably”.
Yep, that is sure one ugly daily chart.
My -- completely amateur, don't listen to me, you'd be a complete fool to put any money on it! -- guess from that chart, is another big downdraft on the way to match the initial down leg at the end of July, possibly followed by a (quite likely temporary) rally back to the 200 SMA.
Of course we could just spend time building *even more* volatility and congestion right about here.
Joy.
Of course now I've said that in public, the rally right back to the highs is practically *certain* to start today :)
(disclosure: UK Gilts, UK Index Linked Gilts, and cash, yes I'm in the UK)
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