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MONTHLY MACD POSITIVE BUT WEAKENING

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This is a good time to stand back and try to put things into a longer-term perspective. First of all, let's see why the 2004 rally has been stalled. The monthly bars in Chart 1 show that the S&P 500 ran into major chart resistance at its early 2002 peak. The horizontal blue lines also show that the S&P had retraced 50% of its 2000-2002 bear market. The monthly stochastic lines also show an overbought condition over 80. That was a logical spot for the cyclical bull market to stall. And stall it has -- for the entire first half of 2004. The monthly MACD lines have been converging since the start of the year (which usually reflects loss of upside momentum), but are still in positive territory. The last sell signal was given near the start of 2000. The last buy signal was given in the spring of 2003.

 

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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