• 30 mins Energy CEOs See Big Payouts Despite Oil Price Crash
  • 2 hours Saudi Arabia Is Fighting A War On Two Fronts
  • 3 hours 40 Million Jobless As Pandemic Fuels Economic Collapse
  • 4 hours What Do India's Latest Reforms Mean For Its Coal Industry?
  • 5 hours Copper Glut Continues To Grow
  • 20 hours How A Pandemic Made Americans Better Workers
  • 24 hours The Trillion Dollar Space Race Crosses Another Milestone
  • 1 day Gold Prices Fall As Stock Market Sentiment Turns Positive
  • 2 days Conspiracy Theories Set Tone For 5G Cold War
  • 2 days Working From Home Will Transform The Energy Industry
  • 2 days The Multi-Billion Dollar Race For A Vaccine
  • 2 days Can Domestic Tourism Bolster Emerging Economies?
  • 2 days Australia Considers $100 Million Investment To Kickstart Mining Industry
  • 2 days Has Re-Opening The Economy Been Successful?
  • 2 days Gold Miners Still Have Massive Upside Potential
  • 2 days The Risky World Of Oil Hedging
  • 2 days Africa Turns To Innovation Amid The Global Pandemic
  • 2 days COVID-19 Sparked A Bicycle Boom
  • 2 days Will Government COVID Intervention Cause Inflation?
  • 3 days The Bitcoin Miner That Is Paid To Do Nothing
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Jes Black

Jes Black

Jes Black, hedge fund manager at Black Flag Capital Partners, specializes in foreign exchange and global macro trends. Prior to organizing the fund he helped…

Contact Author

  1. Home
  2. Markets
  3. Other

Stocks to Accelerate Losses this Week...

The Dow Transportation average climbed to a new five-year high on Friday of 3435 but suffered a bearish daily reversal and closed on the day's lows. Meanwhile, the Dow Industrials closed at a new ten-month low, thus prolonging this non-confirmation between the averages to five months.

Recall that the only other divergence of this type and magnitude occurred in 1977 for nearly five months as the Industrials struggled to overcome the psychological 1000 mark before both averages headed down together with the Industrials falling 27% and Transports loosing 20%.

As we alerted our subscribers, we deployed our bearish bets this month when the Dow broke back below 10,000. If the Transports get in synch to the downside we could see a sharp decline in the broader averages over the next few weeks as we forecasted nearly one month ago. We feel this is a distinct possibility as the Transportation average has recorded yet another bearish divergence between price and momentum while the RSI is close to breaking its uptrend line from the August lows, which is a typical sell signal for a market as it approaches its final top.

Also note the divergence between the two measures of investor bullishness at key inflection points in the market going back to February. Each major peak and trough has seen a divergence whereby one heads in the other direction just before the turn. Moreover, the most recent reading of Investors Intelligence bullish percentage survey was 58.9% - the highest since the S&P 500 reached a two-year peak of 1163 back in March. As we see it, the market should decline for the next two weeks as it did back in March, but if that is the case, the US markets will suffer a major technical breakdown.

Meanwhile, the Bulls try to rationalize the market's poor performance by blaming oil despite the Transports and Small Caps rallying along with record highs in oil. There is an Alice-in-Wonderland quality to it all and regrettably for the Bulls, time tested indicators like the Vix, and market sentiment measures don't show extreme pessimism. If they did we would be buying.

Recent Testimonial for FX Money Trends: "I find FX Money Trends' work extremely helpful. As a macro hedge fund manager I base my success on ideas generated both internally and through external research services: FX Money Trends and its founder Jes Black constantly provide ideas which are based both on very clever fundamental and technical analysis and research. FX Money Trend's intellectual independence makes their ideas precious, never obvious nor "late." - Francesco Clarelli, Italy.

Back to homepage

Leave a comment

Leave a comment