NEW YORK (TheStreet) — Last week, global equity markets were undecided.
China’s and Japan’s equity prices have been moving higher. The Japanese Nikkei reached its highest level since 1996 last Tuesday, but then pulled back at the end of the week. Hong Kong’s Hang Seng made a new monthly low, and the Australian market fell to a six-month low.
Europe was more decisive. Traders mostly sold stocks. The German DAX, London FTSE, and Zurich SMI all fell to monthly lows by mid-week and didn’t recover much by Friday’s close. In Russia, it was much different. Moscow’s MICEX index rallied to its highest mark in three months.
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In the U.S., the selling was even more intense. On May 19, the Dow Jones Industrial Average topped out at 18,351. The DJIA has failed to make a new high since then and continues to sell off. The decline, so far, has been more than 1,220 points, which is its greatest loss of the year.
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Last week began very strong, with the DJIA up 245 points on Monday. It fell 212 points on Tuesday, and by Wednesday, the DJIA had fallen to 17,125, its lowest level since Feb 2.
We had a confirmed bearish/sell signal on Aug. 4, when the Dow 30 was at 17,596. Before I can take any bearish positions in the U.S., this signal needs to be confirmed by the SPX and the NDX-100 as bearish. Those two indexes are now neutral/trendless.
The SPX landed at support levels and found its footing once again. We are getting closer to the cycle lows in September/October, when the downward pressure will push it through its support trend lines. We are still into a sideways direction. It is a little too early to tell if it will continue the sideways motion or decline in some downward momentum.
SPX is undergoing a consolidation in a downtrend trend using the 200-day moving average as support. A daily close below 2,076, which does not hold, should bring about the next challenge to the 2,040 major support level. The current declining patterns are represented in those of the DJIA, New York Stock Exchange and the Dow Jones Transportation Average indexes.
