Stock Market Trends: Double Toppings at 1000
The Chinese passed a $586 billion economic stimulus package and it has the world’s markets jumping up in glee. The rise in US futures shows that, at least early on, the US market plans to join in on the party.
The Correct Call believes investors should take a wait and see approach. Last week’s market fall moved all of our models into the red. Our Market Leadership model, which has been walking a tightrope between buy and sell signals, has fallen back into the red. While a lot of repair has been done to our Momentum Indicators, all three levels are below zero with a combined score of -23.4. A score above 4 is what we need before we dive headlong into the deep end of the pool.
Technical Analysis of the Dow Jones, S&P 500, the NASDAQ and the NYSE
All four of the major index charts show a similar pattern, a double top with declining volume. Until the indexes decidedly close above the double tops on rising volume, we are afraid that the risks favor more downside for the intermediate to longer term. In the short-term, there is enough wiggle room for the indexes to venture back to the top levels. Unless volume really spikes and the indexes close above resistance levels, investors might want to buy ProShares Ultra Short S&P (SDS) if the index approaches 1000. SDS’s objective is to return twice the inverse of the S&P 500, meaning it goes up when the index goes down.
Tags: buy signals, market leadership model, momentum indicator, sell signals, stock market trends, technical analysis
