At the end of November the Dow Jones Industrial Average ETF (DIA) advanced just above +20% from its October low and officially entered a new bull market; however, technically, an intermediate-term rising trend had not been established. There is a bottom above the September bottom (green arrows), but there is not yet a top above the November top. In fact the last top is lower than the November top, and the next thing we are looking for is for price to fall below the December bottom to establish a new falling trend. The PMO (Price Momentum Oscillator) has topped and crossed down through the signal line (PMO SELL Signal).
Other major indexes have also faltered. The S&P 500 (SPY) never made it to bull market territory. It also failed to establish a new rising trend, and its PMO has topped.
The S&P 400 Mid-Cap (MDY) actually did make a higher top, but it has turned down and formed a bearish rising wedge.
The S&P 600 Small-Cap (IJR) is similar to SPY and DIA.
While the broad market has rallied off the October lows, the Nasdaq Composite (ONEQ) has been dead in the water, rallying only +11%. The best that can be said about at present is that it has formed a bullish falling wedge.
Conclusion: While the Dow managed to advance into bull territory, other major indexes remain in bear markets. The enthusiasm that helped the market rally out of the October lows is fading, and current signs are that the rising trend will be abandoned and a new falling trend established. It is not too late for the bull to be revived, but at this point the market appears to be turning down.
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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin
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Carl Swenlin is a veteran technical analyst who has been actively engaged in market analysis since 1981. A pioneer in the creation of online technical resources, he was president and founder of DecisionPoint.com, one of the premier market timing and technical analysis websites on the web. DecisionPoint specializes in stock market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and blog contributor.