Daily And Weekly Charts Show Continued Downside Risks For The Major Averages

The Dow Jones Industrial Average, S&P 500 Index, Nasdaq Composite, Dow Jones Transport Average and Russell 2000 Index (RUT) have warnings on both their daily and weekly charts.

The Dow Jones Industrial Average (DJI) (32,795) will be confirming a death cross on its daily chart today. This occurs when the 50-day simple moving average falls below the 200-day simple moving average. The weekly chart has been negative since the week of January 21. The average is below its quarterly, semiannual, and annual pivots at 33,711, 33,989 and 35,618, respectively. The 200-week simple moving average or “reversion to the mean” is 28,748.

The S&P 500 Index (SPX) (4,188) will be confirming a death cross on its daily chart before the end of March. The weekly chart has been negative since the week of January 21. The average is below its annual and quarterly pivots at 4,383 and 4,528. The 200-week simple moving average or reversion to the mean is 3,404. It’s above its semiannual value level at 4,125.

The Monthly Chart for SPX

The monthly chart goes back to the Crash of 1987, which is difficult to read in the lower left-hand corner of the chart. Each bar is one month.

The green line is the 120-month simple moving average. Note that the low of 4,114.65 set in February was just below the semiannual value level at 4,125. The 12x3x3 monthly slow stochastic reading peaked at 96.60 in July 2021. It’s now declining at 74.67.

A bear market is a possibility it the semiannual value level at 4,125 fails to hold. From the January high of 4,818 to the 120-month SMA would be a decline of 47%.

The Nasdaq Composite (IXIC) (12,975) confirmed a death cross on its daily chart on February 18. The weekly chart has been negative since the week of January 14. The average is below its quarterly risky level at 16,650 and below its semiannual and annual pivots at 13,915 and 14,004, respectively. The 200-week simple moving average or reversion to the mean is 10,453.

The Dow Jones Transport Average (DJT) (15,016) should confirm a death cross by the end of March. The weekly chart is neutral with the average below its five-week modified moving average but with rising weekly slow stochastics. It’s well above its semiannual value level at 13,229.

The Russell 2000 Index (RUT) (1,989) confirmed a death cross on January 19. The weekly chart is neutral with the average below its five-week modified moving average but with rising weekly slow stochastics. It’s just above its semiannual pivot at 1,971.