The MSCI Emerging Markets stock index has topped out at 45 on the long-term chart and is set to reverse targeting 36-37 over the next couple of years, say Nikolas Baptiste at the Technical Analysis Group. However, in the meantime the recent decline will correct over the next few days reaching a max of 45.75.
Negative divergence between the Nasdaq and the % distance from its 200-day moving average is replicating the pattern seen in 2007 before 25% fall in the index, says Riccardo Ronco at Aviate Global. 4300 remains the key support level for the Nasdaq in the face of falling market breadth.
The S&P500 is above its 200-day moving average so historic prices suggest September seasonals should not impact the index this month, says Ari Wald at Oppenheimer. A continuing trend should see the index target 2080 in the weeks ahead.
The formation of a Hanging Man and Doji candlestick pattern on the S&P future last week suggest indecision as the index passes 2000, says Andy Dodd at Louis Capital Markets. However, clearer signals need to emerge before a more bearish outlook can be taken.
This year’s divergence between the S&P500 Consumer Discretionary Index and the main S&P500 index is a bearish signal for stocks, according to Riccardo Ronco at Aviate Global. Such a divergence also took place in 2000 and 2007 and suggests the main index is anticipating a decline in consumer activity.
The S&P500 is set to climb higher despite the recent correction, according to Ari Wald at Oppenheimer. The low level of the VIX should also mean that this correction is more muted than previous corrections both in terms of magnitude and duration.
Ron William, principal market strategist at RW Market Advisory, appearing on IG Index TV discusses how the US equities market remains in bubble territory and how August to October will be a key timing window should the market exhaust.
The long-term uptrend of the FTSE future remains intact, gaining further strength after this month’s rally off support at 6669.5, writes Andy Dodd at Louis Capital Markets. However, strong resistance remains in place at 6861.5, a significant barrier to gains beyond this level.
The current low level of the VIX suggests that stocks are not at a top as is being widely claimed, says Ari Wald at Oppenheimer. Previous declines in the VIX below 15 have usually been followed by periods of above average performance in the S&P500.
The chart of the current IPO market resembles a pre-dotcom crash scenario for stocks, says Edward Loef at Loef Technical Analysis. When compared with Nasdaq chart of 1999, if history is to repeat itself then this would be a powerful warning signal for stocks.