Guest Post: Market Looks Toppy and A Closer Look At The Dow

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By Adam Sarhan, Contributor, SarhanCapital.com

Market Looks Toppy and A Closer Look At The Dow

The market is getting weaker, not stronger. We are continuing to see more and more deterioration occurring as the major indices look toppy up here. The tape continues to break down. The bull market is over 6.5 years old and that is considered an aging bull by normal historical measures. Notwithstanding more easy money from the Fed and other central banks, a break of support will add to the misery.

A Look At The Dow

The Dow Jones Industrial Average is comprised of 30 blue chip stocks. The Dow is down for the year and continues to under-perform its peers. The reason is simple: Most stocks in the Dow are not acting well and more continue to roll over. Right now, there are only 7 strong acting stocks in the Dow and 23 that are either range bound or are in a clear downtrend. That’s not a bullish equation.

There Are Only 7 stocks in the Dow That Are In Good Technical Shape

1.            HD- Remains perched below 52-week highs

2.           JPM – Needs to breakout

3.           MCD – At the higher end of range- needs to breakout above $101.10

4.           NKE – Extended remains a very strong stock

5.           PFE – Negating latest breakout but remains strong on a relative basis

6.           UNH – Looks good as it trades just below resistance of its multi-month trading range

7.            V- Very strong and remains extended

 

23 Stocks Are Either Range Bound Or Not Acting Well:

  1. AAPL
  2. AXP
  3. BA
  4. CAT
  5. CSCO
  6. CVX
  7. DD
  8. DIS
  9. GE
  10. GS
  11. KO
  12. IBM
  13. INTC
  14.  JNJ
  15. MMM
  16. MRK
  17. MSFT
  18. NKE
  19. PG
  20. UTX
  21. VZ
  22. WMT
  23. XOM

Bottom Line:

The writing is on the wall for a classic topping process. If support breaks, odds favor lower prices will follow. Conversely, if the bulls show up (enter bullish catalyst that emerges) we are only a few percentage points below record highs and could easily breakout of this year-long trading range. We remain open for any outcome but the evidence is suggesting the market is getting weaker, not stronger.

2 Comments

  1. Appreciate all you do great American.
    More like a 4.4 year bull run, but still not that big a diff of main thought. Me thinks low rates, low fuel, Fed as major malfunction insurance, housing up, retail, dining, all stronger trend is still chop sideways at worst. If a dip below range bottoms – not time to sell. Buy backs, M&As, 5% savings rate.
    The lefts reg’s & taxing’s dim silver lining is no bubble like 2000, yet. Maybe if/as the left wilts. Bottom before coming break out a week later up out of ranges Oct 16th my guess.
    Just sayin,
    Don

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