Just a quick note this evening, March 31st, the end of the first quarter.
Daily chart sell signals have been triggered by my computer trading system over the last two days in four key stocks (among others): NetFlix (NFLX), Facebook (FB) , Coca Cola (KO), and Exxon Mobil (XOM). Please see that attached charts.
While meaningful sell signals have yet to be triggered in any major stock indexes, my strong belief right now is that the extraordinary "counter trend" rally that began on February 11, 2016 is now over. Among the major averages, only the Russell 2000 Index was able to post an intra-day reaction high today, above yesterday's intra-day reaction highs.
In the weeks and months ahead, when all major U.S. stock market averages are sharply lower from today's closing levels, the financial press will refer to the stock market high this week as the "Yellen Top". Dovish monetary comments from Federal Reserve Chair Janet Yellen on Tuesday, March 29th, served as the catalyst for one last stretch higher this past week. But the music has stopped now and all the chairs are all taken!
Bottom Line: A major downturn in U.S. stock prices appears imminent. Dovish comments from Fed officials not with standing, the perfect storm of bearish pressures is about to unfold: (1) Weak fundamentals in the form of lower corporate earnings and growing recessionary forces, (2) renewed downward pressure on commodity prices as global deflationary factors reassert themselves, and (3) the threat of Britain's exit from the EU turns into reality (Brexit!). Is that a Black Swan circling overhead?
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| Russell 2000 Index Daily Chart with 200-Day Moving Average Line |
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