If you have been reading our recent reviews you will know that we are concerned that the markets are at a critical juncture. And our view has not changed. Last week was the 3rd week down and that, of itself, is a slight worsening of the history of the current recovery uptrend in that there have generally only been corrections lasting 2 weeks since the uptrend started back in July last year.
But, more significantly, the S&P 500 index, in closing at 1074, remains below our important support/resistance area of 1111/1122. This signifies weakness of demand and is a danger in that it would not take much of an increase in selling to push the index down hard. If that happens then the FTSE, the Dow and the Nasdaq will follow suit.
Of course, there is a liklihood that the current downturn is nothing more than a natural correction in a major uptrend and the recovery in share prices may regain its upward course within the next week or two. We say this because, for the moment, the dominant trend is still the Uptrend. But there are an increasing number of signals that suggest that the markets may be on the turn of a possible major downward correction. The individual market commentaries include the split (between positive, negative and neutral) of the 8 trend indicators that we use when assessing the dominant trend and, in almost every case, the number of positve signasl is now in the minority; for the first time since July last year.
We also have to be mindful, in the background so to speak, of the historical picture and for the possiblity of a continuance of the similarities between the current market scene and that of the 1929-32 markets collapse. We blogged this on the 28th January if you have already seen it.
So, in our view the markets are knife edged between reestablishing the recovery uptrend and the start of a possible collapse.
Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/
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