S&P 500: Another Death Cross Imminent?

S&P 500 Index had a "death cross" (a very, very slight one) on the daily chart on Friday, where 50-day Simple Moving Average crosses below 200-day Simple Moving Average.

The index is about to have another death cross on the weekly chart. On the weekly chart, I look at two Exponential Moving Averages (13-EMA and 35-EMA) to see whether they are crossing, or 40-week Simple Moving Average to see if the index crosses below it.

Here's 3-year weekly chart of S&P. 13-EMA and 35-EMA is about to cross: less than 3 point. As you can see, 13-EMA crossing below 35-EMA in December 2007 was a pretty good indicator of a major directional change of the market. 13-EMA stayed below 35-EMA all the way till July 2009. 13-EMA/35-EMA pair does not call the market bottom, but rather it seems to indicate the safer point to go long, as in July 2009. Now 13-EMA may be crossing down again for the first time since December 2007.


I also use 40-week Simple Moving Average on weekly. As you can see, this one spotted the turn in the market a few weeks earlier than 13-EMA/35-EMA cross. Week before last, the index decidedly broke below 40-MA, and it couldn't regain that line this week.

End of the "bull market", as many pundits and analysts are saying?

I don't think so. I'm in the Peter Schiff's camp in thinking that this has been a Federal Reserve and government stimulus-induced counter-trend bull run within the bear market and the run is now ending. Elliott Wavers would say P3 has finally arrived. (The only problem is that they have been calling P3 at every downturn in the market since March 2009.)

Some technical indicators, which, along with 13-EMA/35-EMA cross, I picked up from BreakPointTrades.com guys, also show that the market was never in a bull market. They are all flashing a sell signal. Slow stochastics set at really, really slow (144) shows that the indicator never went to oversold territory in the whole "bull run" from March 2009. Notice that at the market top in October 2007 it was in the oversold territory of above 80.

CCI set at 133 also shows that the market was not in a bull market (above 100). It went nowhere remotely near 100 since March 09. In a bull market, this indicator stays mostly above 100.

Along with another long-term indicator NYSE Summation Index (Cumulative) that also turned bearish in late May, these special technical indicators and moving averages give me some sense of peace of mind, knowing that the things are about to get dicey...

Be safe.

NYSE Summation Index May Be Rolling Over

What is NYSE Summation Index? The explanation is here (from Decision Point), but what I know, thanks to Breakpoint Trade, is that when the cumulative chart of this rolls over it could be that the market top has been reached.



I've been watching this for the long-term trend change, and it seems it is rolling over after 14 months of uninterrupted uptrend. It could whipsaw, as it did on the way down from the 2007 market top.

Just a quick note.

Thanks to Helicopter Ben's positive comment on the US economy, the stock market futures are green, big time. Dow futures up 96 points, S&P 500 futures up 13 points, Nasdaq 100 futures up almost 20 points. It is so senseless it's comical.

NYSE Summation Index (Cumulative) Still Bullish

It's not the kind of index you hear or see very often. This is one of the charts that the guys at Breakpointtrade.com use for the market's bigger trend. (I am signed up to receive their bi-weekly newsletter. These guys are good.)

I recreated it using Stockcharts.com. As you can see, it gave a buy signal at the end of March. It didn't pick the bottom precisely, but really very good enough signal to get in. Ever since, the index (cumulative) remains up-trend, and CCI set at 13 hasn't dipped below 100, i.e. no need to sell my long positions in a hurry, yet. S&P 500, which is plotted at the bottom of the chart, still manages to maintain the uptrend line since March. If you are not so much concerned about day to day fluctuation, this summation index gives a pretty good signal.


If you use it, make sure you plot the chart as "cumulative".

For those of you who want to know what the heck is the "summation" chart, here's the explanation from Stockcharts.com.