By Matthew Kerkhoff
From a technical perspective, the stock market is on fragile footing. Today’s decline in the Industrials reconfirms the bearish short-term trend by creating another “lower low.”
After reaching a new all-time high in late-May, unconfirmed by the Transports, the Industrials failed to overcome their prior high, and fell through their prior correction low. This led to the development of a short-term Dow Theory sell signal discussed on June 29th.
From that point, the Industrials attempted to rally but again failed to overcome their prior high, stopping just a few points short. Now, with five consecutive down days in a row, the Industrials have taken out their most recent low, reconfirming the downward short-term trend. This puts the Industrials below both their 50-day and 200-day moving averages. The 50-day moving average (thin blue line above) has also rolled over and is itself heading south.
Keep in mind that at this level, we are ... Log in or subscribe to continue reading.