Wed May 8, 2019
Our weekly columns have been suggesting topping action in oil and stocks which have moved together. That is now happening. John Murphy has noted that no stock rally has lasted more than ten years and March 9 2019 marked the ten year line. We are now two months, one sixth of a year from that date. I strongly suspect we have seen the high for the year 219.
Events do not drive the desire to invest in stocks, unconscious social mood changes do. The mood changed March 9 2009 to bullish and the mood is now changing to bearish. In my last column I ended by asking how long before the negative political mood infected Wall Street just as it did in 1973. We are getting the answer and it is now. The 26,600 DJIA area is now massive resistance.
Notice the symmetry of the down and then up move. But momentum via the MACD and RSIO topped in late February. Prices are just now reacting as breadth grew more and more thin, ie activity was concentrated in fewer stocks.
The same mirror image has occurred in the BP for energy stocks.
Momentum here peaked earlier than stocks, in late January
Energy prices provide another non confirmation with a lower high than last October.
DJIIA
After a big sell off and rebound Monday, prices fell again yesterday, that is a 1 down 2 up three down sequence, and price is coming back up in a 4th wave bounce this morning.
The Failed China talks are blamed for this but in truth Trump has been overly optimistic and then went pessimistic last weekend. If tariffs are imposed Friday, a replay of the Smoot Hawley failure will have begun.
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