Wk24: Market Recap

22 Jun

As we continually look to the internals for market confirmation, we want to keep in mind that the Breadth, A/D line and Tick should be used in conjunction with one another to more accurately confirm or deny a move in the markets. The Breadth would be considered the lagging internal of the three indicators with the tick being the front runner an showing the first sign of weakness or strength in a market.

With all the top line figures (S&P500, Dow Jones Industrial Average, NASDAQ Composite, Russell 2000) showing the same trend pattern, we will look at the SPY weekly chart to get a better perspective of what is happening.
We see the potential formation of an inverse head and shoulder pattern on a weekly chart of the SPY, a sign of a strengthening market. Zooming into a daily chart however, we find that a potential head and shoulders pattern is setting up, a sign of a weakening market. Nevertheless, a pattern is not confirmed until it breaks out and after the past weeks consolidation we expect a move to be someone strong.

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