All three major US indexes delivered higher opens, higher highs, and up closes, confirming upside continuation and flipping the short-term setup to bullish.
In the US, the S&P 500, Nasdaq, and Dow Jones remain in confirmed downtrends, rejecting key resistance levels and reinforcing a broader risk-off sentiment. In stark contrast, European equities remain relatively strong, with the DAX maintaining its uptrend and the EURO STOXX 50 supported.
Bears are in control in US Equities as Europe continues to show relative strength.
Trying to pick a top in stocks has been challenging. But in the S&P, between Tuesday’s tape ref close confirmation and yesterday’s TD 9, we now can confirm a reversal in trend on the S&P 500. Add in a confirmed low in EURUSD, and we have the technical backdrop for significant capital rotation.
Last week, we noted: “The spotlight has shifted unmistakably to the US Dollar Index (DXY), which flashed a glaring TD 13 sell signal, possibly marking a significant turning point. The bearish indication could have profound impacts across various asset classes”. This week, continued dollar weakness is now creating cracks across the major US equity indices with bearish price flips on the S&P 500 and NASDAQ Composite (CCMP). While the Dow Jones Industrial Average (DJIA)—our “canary in the coal mine”—has already confirmed downside continuation. This is a critical signal that bears watching.
Last week, we endured another version of Groundhog Day in the stock market. This week, the spotlight has shifted unmistakably to the US Dollar Index (DXY).
As we have discussed, the US market and economy have been locked in a reflexive cycle, which, while seemingly self-perpetuating, was inherently vulnerable. The only question was what, if anything, could upend these dynamics. One possible catalyst was the Trump Administration’s policies in terms of tariffs and immigration, which were fundamentally not business friendly. Fast forward to this weekend’s headlines, and investors may be waking up to this hard reality.
Last week, we introduced our new TD Chart Point, using the work of a long-time friend of the business, Kevin O’Dowd, who we believe is one of the best DeMark chartists in the market. Today, we want to update our thoughts and, in particular, draw your attention to the Nasdaq and the EURUSD because next week’s set-up could be decisive. Once again, there is an appendix at the end of the piece for any TD novices. Also, we are in the process of refining this product, so if anyone has any suggestions on anything we could improve or offer, please reach out.
Today, we want to introduce you to a new product, the “MI2 TD Chart Point”. Our intention is to focus on emerging opportunities and, over time, build up a snapshot of the setup in the primary macro trading vehicles across bonds, FX, commodities and stocks.