Looking at the markets today, five technical indicators may show the market is headed down but do not be too quick to pile in on short positions.
Looking at the chart below you can see five technical indicators that may signal the market is heading lower. Here is a list of the five indicators and why they might be saying to get out of long positions as the markets heads toward a possible correction.
- Stochastics – looking at the daily chart below, you can see the stochastics have turned over. I like the slow stochastics but needs confirmation from other indicators.
- Resistance – the S&P 500 is stuck around 950 for about 2 weeks now and is unable to close above 950. The market is currently in a range with 950 as the upper number. No a reason to go short but a good reason to sell long positions and look for a better entry level.
- Volume – has slowly decreased as the market headed higher. As the market reached the 950 level (resistance mentioned above), volume is declining which is an indication that traders do not want to buy at these levels.
- Trend Line Broken – the current uptrend line dating back to March is broken.
- 200 Day Moving Average – this is probably one of the most important indicators on a daily chart. Although the S&P 500 has yet to break down through the 200 DMA, it may be coming. The S&P 500 just broke through the 200 DMA to the upside about 2 weeks ago and maybe in a retest of the 200 DMA; which is one reason not to get short, right yet. If the S&P 500 breaks through the 200 DMA, you may want to start hedging or placing shorts.
Is The Market Headed Lower?
DISCLAIMER: Please use your own research. This post is for informational use only and not a recommendation to buy/sell any securities.
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