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Monday, April 30, 2012

Economically sensitive charts

I thought I would show some weekly charts of some of the more economically sensitive indexes.  I will start out with SPX so we can compare what is going on.

We ended last week with a white price bar, but it was a bullish engulfing candlestick.  The trend was still neutral, but that was bullish price action.  We will see if the market can capitalize and keep moving up. The index is comfortably above last year's high.  Next up is the transports.

The weekly high close this year was back in Feb.  That was well below last year's high.  Price has been clearly sideways since then.  It has held support of the18 SMA, but it has not been able to launch to the upside yet.  A look at the last few weeks show candlestick tails in both directions and the closes are actually tightening up.  This looks like price is coiling up for the next big move, but is awaiting a catalyst to decide which direction.  Lets check on the cyclical index.

This index is in worse shape then the transports for sure.  It has been trying to hold support at the 18 SMA, but it is really struggling to do so.  Notice how much below last year's high this index is.  I think this is a reflection of the weaker global economy then we had last year.  This index is on life support, but so far it is hanging in there.  Next up is the SOX.

This index looks very similar to the cyclical index in the last chart.  It is well below last year's high and is clearly on life support as well.

We have some pretty significant divergences between these indexes and SPX.  It seems unlikely to me that SPX will just keep going up without help.  These other indexes need to get in gear to provide support for an up move.  That can still happen, none of them are beyond repair yet.  However, I think they need to perk up very soon or they will fail.


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