The transition stage for equity markets (Buy when it snows, sell when it goes) has started earlier than usual this year. Protective strategies and profit taking for investors with a 3-6 month time horizon is appropriate given the current fundamental, technical and seasonal influences.
The S&P 500 Index fell 10.39 points (0.74%) last week and another 15 points following release of the job report on Friday. Intermediate trend is up. However, the Index broke below its uptrend line on Thursday and its 20 day moving average on Wednesday to complete a bearish rising wedge pattern. The Index likely will test its 50 day moving average at 1,370.05 shortly. Short term momentum indicators have rolled over from overbought levels.
The TSX Composite Index plunged 289.07 points (2.33%) last week. Intermediate trend is down. The Index has completed a modified head and shoulders pattern. The Index remains below its 20 and 50 day moving average and fell below its 200 day moving average last week. Short term momentum indicators are trending down, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index remains negative. A loss of another 130 points or more is likely at the opening today.
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