This video discusses in depth, the charts of the S&P 500 Index along with the top ten components which combine for a nearly 20% weighting in the index. As with yesterday’s video discussion of the top 10 holdings in the Nasdaq 100, my reasoning for focusing on the most heavily weighted components in this key US index is to get a better read on where this leading index (i.e.- the US stock market), might be heading. A couple of points to keep in mind:
– Although I make an overall longer-term bearish case in these videos, the nearly all-trend indicators (short, intermediate and long-term) remain on buy signals at this time. While some of the short trade ideas current listed on the site are profitable at this time, short trades remain counter-trend trades at this point and as such, should only be consider by aggressive & experienced traders and/or those wishing to hedge against a net-long portfolio.
– The potentially bearish developments & chart patterns discussed in this video are based on the daily, weekly and even monthly time frames and as such, may take weeks or months to play out, assuming that they even do play out as expected. My goal was to highlight key support levels or technical developments on each stock covered in these videos as once the majority of the leading stocks have clearly broken down, this might provide us with an early indication that a new trend reversal is underway (which will most likely be confirmed many weeks later and percentage points lower by the mainstream media and even many commonly used trending indicators).
– Finally, just to clarify a question that some might have regarding the recent tick up many economic indicators and overall bullish outlook for the US economy & stock market. There’s an old adage regarding the financial markets and the economy that goes; It is always darkest just before the dawn. Obviously, this refers to the fact that just before a major recession/bear market ends, the outlook at the time looks worse than at any previous point during the downturn (think late 2008/early 2009). I like to say the corollary to that adage holds true as well; Things always looks brightest just before dusk.
All the divergences, overbought conditions and other potentially bearish technical developments may or may not play out in late 2013/early 2014 as I expect they will. Regardless of what the broad market does, there will always be attractive trading opportunities on both the long and short side as well as various sectors or assets classes (precious metals, bonds, tech stocks, etc…) As such, I will continue to strive to post both long and short trade ideas with the most attractive risk/return profiles as I come across them. I hope you enjoy the video and as always, feedback and constructive criticism is welcomed. For those wishing to skip ahead to the charts and discussion on a particular stock, they are covered in the following order: $SPX, AAPL, XOM, GOOG, JNJ, MSFT, GE, CVX, PG, BRK.B, WFC.