What The Price Charts Reveal Now

When the inflation readings show increased inflation, that means the Fed may want to battle it by taking interest rates higher and for longer than previously thought. Those readings just showed increased inflation and so investors continued to dump stocks on the fears of the interest rate situation.

Other factors enter the picture such as the global effect of Putin’s invasion of Ukraine and concerns over the future of China’s relations with the United States. It all adds up to the type of anxiety unwelcome on Wall Street and the equities traded there tend to find more sellers than buyers under these circumstances.

It looked so good at the very beginning of February as the stock markets seemed to pick up steam after a decent January. Now, looking back on it with the benefit of hindsight, it may be that those peaks hold as THE highs for a while. There’s nothing like the expectation of higher interest rates to ruin all of the fun.

The Standard & Poor’s 500 index has a daily price chart that looks like this now:

The rally off of the October, 2022 low is failing to make it back up to the August high in the 4200 area. The 200-day moving average (the red line) is continuing to downtrend even though the 50-day moving average (the blue line) crossed above it a few weeks ago.

That Friday’s close managed to stay above the 200-day is nice but that it closed below the 50-day is a problem.

The weekly chart for the S&P 500 is here:

Note that the index is crossing back below the 50-week moving average with a serious looking red selling bar. Are we in for a re-test of the October low? It’s a positive for the S&P 500 that the 200-week moving average trends steadily higher despite everything.

The NASDAQNDAQ
-100 index price chart is here:

It’s a better-looking chart, generally, than the S&P 500, with the Friday close managing to remain above both of the moving averages. It’s a good look that the 50-day is trending upward and that the 200-day seems about to turn from down to up. To establish that a bull market is intact, the index needs to the August, 2022 peak just above 13,600 — a long way to go.

Here’s the weekly price chart for the NASDAQ-100:

The drop below the 50-week moving average with that big red bar of selling is not bullish, especially coming so quickly after the strong early February high. Similar to the S&P 500, the NASDAQ-100’s 200-week moving average is relentless trending upward, a good look on this longer-term chart.

The iShares Russell 2000 ETF daily price chart is here:

Representing the movement of small capitalization equities, this ETF looks a little better than either the S&P 500 or the NASDAQ-100 indexes. It almost but not quite made it up to the August, 2022 high of 200.

Having fallen from an early February peak, the fund continues to trade above both the 50-day moving average and the 200-day moving average. Small caps aren’t affected by higher interest rates? This seems unlikely.

The weekly chart for the iShares Russell 2000 ETF looks like this:

It’s still got quite a long trip ahead to make it back up to the November, 2022 peak of 240. Despite this week’s 2.91% slippage, the small cap benchmark remains above both its 50-week and 200-week moving averages.

Not investment advice. For educational purposes only.