Like a combination of stars wearing it were bad omens, the SP500 is weathering at odds avalanche of bad macroeconomic data are published daily.
Among the series of negative indicators that have appeared and that presage the worst they could include the following:
- Hindenburg Omen , but become fashionable recently invented by mathematician Jim Miekka more than a decade, provides for a high probability that a stock market crash occurs. It is based on the alarm triggered by two events: 1- NYSE actions that have reached maximum and minimum of 52 weeks have exceeded 2.5% respectively and an upward moving average 2- 10 weeks compared to the indicator NYSE McClellan Oscillatorthat shows market fluctuations.
- ECRI Weekly Leading Indicator Index , which predicts business cycles ahead in USA. He arrived this summer to levels that predict into recession.
- Death crossing , occurs when the short moving average short term downward to the longer term. This occurred in July in the SP500 when the moving average of 50 days cut down the 200 days.
- September seasonal pattern , is a statistical study with historical data on the average monthly return. In the graph below you can see a negative return of nearly 1% in the month of September since 1950 for the Dow.
- Macroeconomic data ; drop in GDP, rising unemployment …
Beyond this number of indicators and data, a practical exercise to do for ourselves is to study the technical aspect graph SP500 and analyze the current situation where it is and the possible scenarios.
The SP500 installed in a trading range during the summer has fluctuated between a minimum and a maximum 1,010 at 1,130 pts. The support important to consider in the lower range would be around 1040 pts, which has served to bounce repeatedly support upwards (green arrows). At the top, the key would be in the resistance of 1,130 pts and that twice has been unable to transfer, but must first overcome to achieve solvency and those in the 1,060 and 1,100 pts.
Crossing downward moving average 50 days to 200 days (Cruce death, purple arrow) in early July, along with the maximum and minimum descent since April and a possible figure of HCH be drawing , leave the index in a very delicate situation and technical bearish scenario as the most likely continuity.
Faced with this situation the SP500 support at 1,040 pts, the failure of which would send to hell and would claudication of the market to the bad economic data, should act prudently, to control the maximum risk assumed in equities and wait it clearly opted for one side or the other.
And above all !, that did not matter what our sympathetic friend, whose survive ( I will survive) Sings victory prematurely.
What is your favorite indicator? Leave a comment …
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