Insiders Advisor
  • Stocks
  • World News
  • Business
  • Politics
  • Stocks
  • World News
  • Business
  • Politics

Insiders Advisor

Stocks

S&P 500 Flashes Major Topping Signals

by April 13, 2024
April 13, 2024
S&P 500 Flashes Major Topping Signals

Toward the bottom of my Mindful Investor LIVE ChartList, there is a series of charts that rarely generate signals. So why would I include things like the Hindenburg Omen and Coppock Curve, which are usually a nonfactor during my regular chart review, in my main list of macro charts? Because I’ve learned that when these rare signals do actually occur, it’s best to pay attention!

As I checked in on the markets this week during Spring Break, I noticed that the weekly S&P 500 chart showed that the RSI had just broken down out of the overbought region. And while the weekly PPO has not yet registered a sell signal, it finished the week by almost doing so.

At major market tops, you’ll usually see overbought conditions leading into peak, as prices move aggressively higher in the later stages of the bull market. The weekly RSI (bottom panel) pushed above the 70 level in mid-January, and has remained above that threshold until this week.

The weekly PPO is an adaptation of Gerald Appel’s fantastic MACD indicator, which uses a series of exponential moving averages to identify the primary trend and indicate trend reversals. If we would get a confirmed sell signal next week, with the PPO line crossing down through the signal line, that would be the first signal since the market peak in August 2023.

Let’s bring in some additional price history to consider how often this dual sell signal has triggered, and what has usually followed this bearish confirmation.

This pattern has occurred ten times since the 2009 market bottom, with five of those signals resulting in some of the most meaningful drawdowns of the last 15 years. The other five times ended up being fairly brief pullbacks within a longer-term uptrend.

How can we differentiate the winning signals from the less successful indications? Well, the winning signals were followed soon after by a break of the 40-week moving average, used on the weekly chart to emulate the 200-day moving average from the daily chart.

During the false sell signals, we never saw a confirmed break below the 40-week moving average, as buyers seemed to come in to buy on weakness and push prices back higher. Looking forward to the coming weeks, that would mean that an S&P 500 below 4680 or so would indicate a high likelihood of much further downside for stocks.

It also tells me to focus in on other macro technical indicators, using breadth indicators and the daily S&P 500 chart to further validate the short-term price momentum.

S&P 5050 remains a key short-term support level, as this served as a key pivot point in February and March. As the SPX has begun an apparent rotation down to this support level, it’s worth noting that the daily RSI is now below 50. The percent of stocks above the 50-day moving average is now below 50%, and the McClellan Oscillator is well below the zero level.

All of these short-term signals speak of a market in a corrective phase. If and when the S&P 500 would break below its 200-day moving average (less than 500 points away after Friday’s close!), that would mean the short-term deterioration has fueled enough of a breakdown to trigger our weekly sell signals.

In either case, I’ve seen enough after this week’s overheated inflation numbers to consider a much stronger downdraft as we enter the meat of earnings season. Whatever you think may come next for the S&P 500 and Nasdaq 100, now could be a perfect time to make sure you have a good exit strategy in mind!

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!

David Keller, CMT

Chief Market Strategist

StockCharts.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

previous post
MEM TV: Time To SELL EVERYTHING?!
next post
Keeping Up With The Jones – How Weakness in This Index May Foretell a Broader Market Correction

Related Posts

Spotting Tradable Pullbacks after Trend Reversing Surges

March 2, 2024

Sentiment And Small Caps Are A 1-2 Punch,...

March 3, 2024

Your Selling Methodology is Your Paramedic to Profits

March 2, 2024

Could This Stock Be the NEXT NVDA?

March 2, 2024

MEM TV: 3 Great WAYS to Play AMD...

March 2, 2024

Market Maker Manipulation on AAPL Has Been Egregious...

March 3, 2024

Three Sectors Leading SPY Back To Offense

November 8, 2024

AMD’s Sensational Halt — What You Need to...

February 24, 2024

How to Trade MicroStrategy’s Painful Plunge: The Levels...

November 26, 2024

Gold Top? Focus on These Potential Price Objectives

June 17, 2024

    Fill Out & Get More Relevant News


    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Latest News

    • ‘Game changer’: Bipartisan senators gunning for Russia sanctions ready to give Trump runway

      July 15, 2025
    • Constitutional scholar uses Biden autopen to flip Dems’ ‘democracy’ script against them: ‘Scandal’

      July 15, 2025
    • Senate GOP braces for test vote on Trump’s $9.4B clawback package

      July 15, 2025
    • Anthony Bernal: Who is Jill Biden’s top aide ordered to testify about alleged cover-up?

      July 15, 2025
    • Hegseth abruptly pulls Pentagon officials from ‘globalist’ Aspen conference

      July 15, 2025
    • Mike Waltz faces post-Signalgate ‘brutal’ grilling from Dems in UN ambassador hearing

      July 15, 2025

    Categories

    • Business (1,306)
    • Politics (6,388)
    • Stocks (904)
    • World News (460)
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: insidersadvisor.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 insidersadvisor.com | All Rights Reserved