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Two Market Sell Signals To Look For This Week

Last week I presented reasons why the stock market rally from the March 23 lows was ending. This included “island reversals” on the daily charts for the Dow Jones Industrial Average and the S&P 500. These are sell signals.

Last week ended with the Dow, S&P 500, the Dow Transportation Average and Russell 2000 below their 200-day simple moving averages. The Nasdaq Composite continues to trade in its own world. It’s well above 200-day simple moving average at 8,712.57. It set a new all-time intraday high of 10,221.85 on June 23.

Describing the Weekly Charts

The weekly chart for the Dow Jones Industrial Average is negative with the average below its five-week modified moving average at 25,142. It’s above its 200-week simple moving average or reversion to the mean at 24,051. Its 12x3x3 weekly slow stochastic reading slipped to 75.68 last week, down from 78.46 on June 19. The Dow is just below its monthly pivot at 25,157 with its quarterly pivot at 26,091. The Dow is well below its annual, and semiannual risky levels at 29,964 and 30,361, respectively.

The weekly chart for the S&P 500 remains positive but overbought with the index above its five-week modified moving average at 3,001.4. This index is above its 200-week simple moving average or reversion to the mean at 2,694.4. Its 12x3x3 weekly slow stochastic reading slipped to 80.71 last week, down from 82.68 on June 19. Its above its quarterly, monthly and semiannual pivots at 2,979.6, 3,062.1 and 3,303.4, respectively, and below annual risky level at 3,466.5. A weekly close below 3,001.4 this week will result in a sell signal.

The weekly chart for the Nasdaq is positive but overbought with the index above its five-week modified moving average at 9,419.73. The Nasdaq is well above its 200-week simple moving average or reversion to the mean at 7,253.16. Its 12x3x3 weekly slow stochastic reading slipped to 89.15 last week, down from 89.94 on June 19. Its quarterly value level is 8,559 with semiannual, monthly and annual pivots at 9,074, 9,605, and 9,352, respectively. This week’s risky level is 10,465.

The weekly chart for the Dow Jones Transportation Average is negative with the average below its five-week modified moving average at 8,832.01. The average is below its 200-week simple moving average or reversion to the mean at 9,901.84. Its 12x3x3 weekly slow stochastic reading slipped to 67.73 last week, down from 70.48 on June 19. Transports set its all-time intraday high of 11,623.58 back on September 14, 2018. Its monthly pivot is 8,806 with quarterly, semiannual and annual risky levels at 9,269, 12,155 and 12,755, respectively. 

The weekly chart for the Russell 2000 is neutral with the average above its five-week modified moving average at 1,371.65. It is below its 200-week simple moving average or reversion to the mean rose to 1,484.12. Its 12x3x3 weekly slow stochastic reading slipped to 73.23 last week, down from 74.03 on June 19. The small-cap index set its all-time intraday high 1,742.09 back on August 31, 2018. Its quarterly, and monthly pivots are 1,424.48 and 1,409.46, respectively, with semiannual and annual risky levels are 1,831.9 and 1,910.58, respectively. A weekly close below 1,371.65 this week will result in a sell signal.

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