Welcome to the Trading the Line Special Report.
The market is back under pressure as a series of gaps down and manic attempts to recover reveal the distributive nature of May and find the market back below the important 200 day moving average.
For me, that is a Bear Market Warning flashing.
Of course, a rapid recovery back above the 200 day moving average would be a very welcome sign, but in the meantime the market continues to look for stability in what looks like an increasingly unstable World.
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As we can see in the chart below with the T volume oscillator*, the market was starting to weaken from mid April – as the oscillator starts to diverge with price. The oscillator is declining below zero whilst price is making new highs.
The market was running on vapors, and it was running out of time.
The large T structure projected a high on about 16 April with a possible subsequent high on about 09-10 May but the 01 May engulfing down day was enough to signal the end of the spring advance as each subsequent attempt to move back up has been rapidly sold into.
* The T volume oscillator is an indication of Buying Power within the market as a whole
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Zooming out to the weekly chart below.
We can see that the market stretched up through the previous resistance levels at 2800 and 2870 into a token new high at 2950 before its completion of the Spring advance.
The weekly and monthly close below important support looks, at least for now, rather ominous.
As we can see there is important rising support in the 2690s, but much lower starts another tipping over effect, and the 'delights' of Pandora's Box below that.
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As we can see in the monthly chart the rising trend line from the 2000 high continues to be very strong resistance.
The monthly close below 2780 (10 ema) is a bearish indication. Whilst strong potential support lies at the 2690 level (21 ema), further weakness would be a very ominous sign.
The next very long range projection for a high is in the September – October time frame. If the market is to recover and proceed back to new all time highs or perhaps an important lower high, we need to see some kind of recovery back above the 10 ema.
The long range oscillator continues to be in decline and is potentially warning of further trouble ahead.
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All in all, 2019 continues the dynamic range of 2018 – far beyond the experience of the previous years. We should expect price volatility and price expansion to continue and trade accordingly. This is a Brave New World.
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Regardless of whether the market can recover or whether deeper low(s) are ahead of us, the simplicity of the proprietary price based S/T Signalling System continues to keep us on the correct side of the market, with price firmly below Sell Signal levels.
If you would like to learn more about using the S/T Signalling System please get in touch.
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Be prepared for whatever is coming next, and trade with confidence:
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Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.
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