A Trepidatious Trader
For the first time since 2009, earnings growth for S&P companies has turned negative, which is a significant warning sign.
Prior to this course of action, the underlining strength of the broader market displayed a significant number of daily, weekly, and monthly divergences against the prior highs established in 2011 and 2012. Yet since I highlighted the price action in July, SPX 1325, as a rather bullish explosive set-up based upon the convergence of moving averages witnessed prior to market tops in 2007 and 2011, the market has reverted itself to a neutral yet bearish undertone. Many of the internals that registered during spring months have been washed or will likely be negated on a further rally in equities.
At this juncture, what is more important than actual price movement in equities are the movements of technicals to confirm price. This is something we did not witness in May 2011 or June 2011 and this provided sufficient reasoning for turning outright bearish on the market. While there are still signs of a top forming, I am seeing signs that a case is to be made for a new bull market. Here are my primary thoughts on where the market stands and where we are headed.
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