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Technical Analysis

US Equities – Market Top?

by Antonis Benis, on Jan 21, 2020 4:56:13 PM

This is an update of my previous report on January 10th.

In that report, I wrote that I was expecting a top on that same day. The forecast failed badly; markets continued higher for another week, rising another 1,5%.

Market conditions/setup tools have become even more extreme, see updated charts (1-3) of “Equity Put to call ratio”, “NYSE net High-Low” and “Smart/dump money confidence spread”.

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Equity Put Call Ratio De-Trended trading anaylsis chartCourtesy of sentimentrader.com


 

NYSE Net High-Low % trading signals chartCourtesy of sentimentrader.com


 

Money Confidence Spread by Smart Money Dumb

Courtesy of sentimentrader.com


Advance/Decline Line

At the same time, there is RSI divergence in the daily, weekly and monthly time frames, which is a negative.

However, Advance/Decline line and high yield bond Advance/Decline line (market breadth) keep on making new all-time highs (see charts 4,5), strongly suggesting that the long expected correction will be a minor one (up to 10%); this is not the way major highs are made.

NYSE Advance Decline Line Trading Signals Chart

Courtesy of sentimentrader.com


High Yield Bond Cumulative Advance Decline Line

Courtesy of sentimentrader.com


The daily SPX can potentially record a TD sequential Sell Setup @8 or @9 today or tomorrow.

Cycles have topped around the turn of the year, suggest a decline into the first half of February, a bounce into March and renewed weakness into April.


Gann Analysis 

Gann analysis: I found it very difficult to find reliable Gann resistance levels, thus further suggesting that the expected top should be a temporary one; patterns are easier to find at major market tops.

Anyway, this is the best I could do; of interest is that the converted charts for the Nasdaq 100 and especially so for the DAX are almost textbook Gann (see charts 6 -9)

NASDAQ 100 daily trading signals Gann Analysis


NASDAQ 100 Index US Dollar to Euro trading signals Gann Analysis


S&P 500 trading signals Gann Analysis


DAX converted trading signals Gann Analysis


Conclusion 

Bottom line: Sounding like a broken record here, but there is overwhelming technical evidence that a temporary market top is nearby (if not already in the market). A bearish Japanese candlestick should mark the top; the line in the sand becomes now the 10d MA (currently at 3302 and risisng), a close below would confirm the bearish price flip.


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Topic:Trading SignalsOnline Trading PlatformAsset AllocationActive TradingInvestment StrategyGann AngleNYSE
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