Since last Friday I have been looking at charts and data to make some sense of what is taking place currently in the markets. Friday it looked as if the uptrend in play would continue with modest growth in place and expectations the economic picture would improve as the year progressed. On Monday it looked as if the market was topping as the issues with Russia and Ukraine pushed the markets lower on a catalyst of uncertainty. That illuminated the worries about the economic picture and outlook for earnings growth in the US markets. The rally on the relief relative Russia led to big bounce and thoughts of topping came to mind along with a climax run. But today, Wednesday, it is taking on the look of a market that is tipping or on the verge of that event. A look at relative strength trends versus price trends over the last 8-10 weeks shows divergence in strength versus gains in price. All said, there are plenty of questions in place for the broad markets and we will have to be patient, adjust our stops and monitor our risk moving forward.
This leaves me with the question, Tipping, Topping or Trending? Which will be validated in the coming days as this all unfolds. Scanning charts, reading analyst reports and listening to the experts on Wall Street has only lead to more confusion. That tells me that something is on the verge of happening and we need to make adjustment to manage the outcome… good or bad.
I am going to cover this on tonight’s research video update as it will be easier to explain and show the charts. Watch the Research Video posted for Wednesday to view more on this topic on its page or we have added it below as well.