9-17-08: What is going on with the Stock / Currency Market?

Where are the markets going?  We had our worse down day since Sept 11.   What is in store for us.

Let’s let the charts tell us what is going on.

Below is a weekly chart of the percentage movement for the S&P, Dow, Nasdaq.    Green is the Dow, Brown is the SPX, and blue is the Nasdaq.    Observe that the Dow is still more bullish then the other two markets.    In fact, if you look back in time, the Dow has typically been on a higher percentage than the other two markets.   This may change but this has typically been the case.

Weekly Percentage Based chart of all markets

Below are the monthly Ichimoku charts for all three markets

Monthly Ichimoku chart of INDU

For the INDU (Dow), price has hit the top of the kumo cloud now.    This is a major support area.   If price starts to go into the Kumo cloud, we are going to experience a lot more consolidation.   Remember, this is a monthly chart.    Notice, the last time we were in the cloud was back in 2001…..

Monthly SPX chart

For the SPX, price is in the Kumo Cloud.   This is not good at all since price inside the Kumo cloud indicates consolidation.   This consolidation is on a monthly chart too.    We need to see where the monthly bar is at the end of the month.   Hopefully, it can close above the Kumo cloud so we can have a chance to move higher.    The kumo cloud is thick so it is hard to be a trend trader right now for the S&P.

Monthly NDX Ichimoku chart

For the NDX chart, price is still above the Kumo cloud.   The NDX monthly Ichimoku chart is very different compared to the INDU and S&P.    This is due to the huge upward movement created by the Internet in 1997.

Monthly chart of the INDU (9/16/08)

In conclusion, we need to see what the markets will do by the end of the week.   Since there are no real trends, there are no trades at this time.      I am sure we can find some individual stocks that have a good Ichimoku setup.   However, you only want to trade with the markets NOT AGAINST them.

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About the Author Manesh Patel