Week 50 Mid-Week Trending Updates
OK, here we go. We have now had the final Fed meeting for the year and are ready to say goodbye to this year. Just over 2 weeks of trading left and here are how the major markets are trending.
A bit of a mixed bag here. Dow Jones remains the strongest and the S&P 500 certainly has improved from last week. But the Russell 2000 remains weak. Also, the Emerging Markets turned slightly weak. It is hard to tell where the markets go from here. Certainly, the S&P 500 is what I use as my guiding light and that looks short-term OK. I do fear though that the markets have been too complacent lately and some chart patterns don’t look good. Here is the 1-year chart for SPX.
I have drawn a thick yellow trendline that is very distinct through the year. We can see that the price has never really been able to pierce this trendline. The purple automated trendline is the 150-day moving average and the price has been consolidating around it lately.
The price did take out the thick trendline yesterday but fell back below it today. That line indicates a series of lower highs for the price and until that is not meaningfully pierced, the risk will remain to the downside.
Reviewing the S&P 500 sectors.
The trending, in general, is improved for sure. The Healthcare and Industrials are perfectly bullish at this time. Consumer Discretionary is not doing well as would be expected in a high inflation environment. Energy continues to underperform and now, Financials have also started underperforming.