The Monthly, Weekly, and Daily Stochastics cycles are shown on
the charts below of the 6 Major Indices. Also shown on each
chart are Bollinger Bands, and the 50 (red) and 200 (pink) smas.
On a
Monthly timeframe, the Stochastics:
- are in overbought territory on the Dow 30, S&P 500, Nasdaq 100, and
Russell 2000 - have hooked down on the Dow Transports and are approaching 50
- have recently hooked down on the Dow Utilities
On a
Weekly timeframe, the Stochastics:
- are in overbought territory on the Dow 30, S&P 500, Nasdaq 100, and
Russell 2000 - are below 50 on the Dow Transports
- are in oversold territory on the Dow Utilities
On a
Daily timeframe, the Stochastics:
- are below 50 on the Dow 30, S&P 500, and Nasdaq 100
- are in oversold territory on the Russell 2000
- are in oversold territory on the Dow Transports
- are approaching overbought territory on the Dow Utilities
In
summary, the Dow Transports is the only one that is close to its 50
Stochastics on the Monthly timeframe. The only one that is
oversold on a Weekly basis is the Dow Utilities, but it is
nearing overbought on the Daily. The only ones that are oversold on a
Daily basis are the Russell 2000 and the Dow Transports. These
three are the ones to keep a close eye on to see if buyers support these first
any time soon. If not, we may say the Dow 30, S&P 500, Nasdaq 100, and
Russell 2000 drop to their 50 sma on the Daily timeframe before
buyers return, generally, to these markets at an oversold Stochastics level. If
a subsequent rally is weak, we may see price drop to the 50 sma or the lower
Bollinger Band on their Weekly timeframe to co-incide with an
oversold signal on the Stochastics.
I would
note that the S&P 500 is extremely close to forming a bearish moving average
"Death Cross" on the Monthly timeframe…one to watch, as it could signal a
return of high volatility if it forms.
Two volatility
charts I'm watching are the following Daily ratio
charts of the SPX:VIX and RUT:RVX. I'm
watching these in conjunction with the above Stochastics cycles as they pertain
to the S&P 500 and the Russell 2000 Indices.
Price closed today
(Wednesday) on SPX:VIX just below the lower channel, once more,
signalling an increase in volatility, with the hint of more to come…also the
Momentum indicator closed below the zero level.
On
RUT:RVX, price closed just above the lower channel on increased
volatility. As I mentioned in yesterday's post, I'm watching to see if price drops below
this channel and, subsequently, 37.00, as a signal of further weakness to
come…the Momentum indicator closed below the zero level to signal that
volatility may rise further.
