US Stock Market Analysis May 02 – 2010

As regular members and casual readers will know, I post market updates when I believe the market is about to change trend.  I do not see the point in a daily market update, as describing what is plainly obvious to the reader is an exercise in futility and painfully boring content will not impress our visitors.  Instead I like to attempt to warn our members when there is a change in trend likely.  As the market spends most of it’s time actually in a trend, it is these trend changes that are of critical importance, not the usual “oh it was a reasonable day on the markets, the Dow crept up 0.2% and the S&P 500 followed suit”

So here I am again writing another market update.  Following on from my 2 previous market updates on April 27 2010 & March 30 2010, I highlighted potential negative divergences forming in the major market indices.  The significant update is that now the  divergence of RSI 14 with a moving average of 14 on a daily chart is significantly negative for both the  DJ-30, SP-500 and the Russell 3000.  Also MACD 10:30:5 has barely seen the light of day above the center line for the last 4 weeks.  We have also seen 2 very negative days last week, on Tuesday and Friday, the likes of which we have not seen since the market wobble in January / February 2010.  Also on the last 3 significant down days, we have seen this on increasing volume.  In fact the last 12 days have seen increasing volume suggesting that there is significant action occurring at these price levels, making it significant.

The S&P500 has broken through its 10 & 20 day moving averages, the next target might be the 50 at 1165.  The same has occurred on the DJ-30 with a 50 day moving average as a negative downside target of 10762.

S0, I warned of a potential downside move, and it seems to be occurring.  We will see over the next 2 weeks the full extent of the markets indecision, just be careful with your portfolio.

Do not bet against a falling market.