The world of business is global. Today, I was paging through my chartlists and noticed almost every iShares ETF is at or below the 200 DMA. Some of this is the strength of the US Dollar, but broadly speaking, the investing community is discounting these country specific ETF's. More importantly, they continue to make lower lows and lower highs which is the definition of a down trend.
When I go to the country specific stock market indexes it does not look this weak. However, here is an important part of the big picture. The Dow Jones Global Index ($DJW)
We can see in the upper pane, that it has under performed the $SPX. However, the main takeaway for this chart is the critical place on the charts today. We can see the blue lines represent strong uptrends. Until this recent pullback, the bottom trend line contained all spike lows. This test of the 200 DMA is now below the trend line. To me this blogs key takeaway is the global weakness. IF the S&P 500 companies are global, we should start to see it in the october earnings reports.
If everything is under the 200 DMA in $US Dollar terms, it is usually a problem.The next four weeks will give us earnings information. The double tops on a lot of these charts mark concern for me, or the group generally sitting on 200 DMA tests while the US market is so close to the recent market top makes me concerned about the broader picture.
Trade carefully, but this looks like the sort of global pressure that will pull the S&P 500 down to its 200 DMA. Maybe the 200 DMA holds on the global index shown above on $DJW. There are a lot of critical chart levels being tested currently. This is an important time to be protected. I would expect a major bounce the first time the $SPX tests the 200 DMA.
I will be doing another Webinar this Thursday at 4:30 EDT/1:30 PDT. Hope you can can join me. I will post the link to the live webinar on this blog (the Canadian Technician) on Thursday. I will also be presenting the Market Roundup video on Thursday. If you are a subscriber you can catch that on the Market Roundup Blog. Hopefully you are enjoying the videos with commentary. The webinars should be even more interactive!
Good trading,
Greg Schnell, CMT
