The Stock Market of 2007 Redone?
Divergences and weakness in the relative strength line is glaring for those that want to see. The SP500 is not far from highs while the Nasdaq is struggling. Taking the Russell into account one can be more negative.
It closed for a second day below its 200 day moving average. Add in the fact that many of the leading stocks have been hammered and are below 50 and even 200 day moving averages. The fact that quality growth stocks are doing badly says a lot about the health of the stock market. The rotation has been defensive mainly to energy.These are not the type of stocks that generally lead a sustained rally.
The relative strength line is weak. Overall it looks like a real divergence is forming.
This market is looking more and more like it is putting in a major top similar to what we saw in 2007.
We all remember 2007 and 2008. This is not a market that is overly healthy. Caution and a full trading plan need to be in place.
If you need assistance in building your trading plan or in need of a mentor….I am an email away. More so available for speaking engagements…