Index Anemia

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Almost precisely one year ago today, all holy hell was about to break loose in the financial markets. My, how times have changed. Trillions of dollars later, the problems have been spackled and shellacked to oblivion. Let’s take a fresh look at eight important cash index markets.

The Dow Composite is holding steady. That ascending trendline is all that matters at this point. The market seems relatively weak at this point, grinding it out day to day, but until and unless that trendline is broken, the bulls remain in control.

Everyone and his brother is bullish on energy these days – – I have seen nothing but wild-eyed bull stories about all-things-energy lately – – but I contend that the surge we’ve seen in both commodities and, more importantly, energy companies, is about over.

Returning to the Dow indexes, the Dow Industrials has been creeping along the underside of its broken trendline for months now. The sea-change that took place was the Covid crash. That mutated the trendline from support to resistance.

The failure of the Transports line is more recent. Although I am not showing the Dow Utilities here (which rounds out the final part of the Composite as a whole), it has been dragged down lately due to soaring interest rates.

One of my favorite long-term charts is the Major Market Index. Just take a look at that triangle apex – – beautiful!

Equally as pretty, although covering a much shorter span of time, is the S&P 500. This wedge has been cleanly broken, and yesterday we kissed the exact apex perfectly.

One of the superstars over the past four months has been the small caps. There are two trendlines to watch here: a short-term and a medium-term one. One good, strong down day would snap the short-term.

Lastly, in case you hadn’t noticed, traders around the world are falling asleep at their keyboards, and it’s easy to see why: volatility has been beaten and battered down to a coma, and we are at the lowest levels we’ve ever seen in the post-Covid era. Pathetic, ain’t it? But perhaps an opportunity to go long volatility, as long as everyone is sleeping.