General Major Market Indices - An Overview of the MarketGeneral Major Market Indices
These six market indices give a very good snapshot of where we are in this difficult to discern market and why uncertainty still lingers as we continue to climb a wall of worry.
The Chart
▫️ Every index 1 - 6 below has been rejected or is struggling to make new highs on the weekly timeframe.
▫️ At the same time each chart appears to be finding support on the 200 day moving average (40 week moving average). You could argue that ascending triangles are forming, in which scenario we would await a confirmation breakout above the upper resistance line.
▫️ Charts 1 – 3 appear to be leading charts 4 – 6
- You can see that the DJ:DJT , TVC:DJI and TVC:XMI charts
(Charts 1 – 3) have all attempted to break above the
overhead resistance and have been rejected or are
struggling to break through.
- Conversely the CBOE:SPX , NASDAQ:NDX and TVC:RUA charts
(Charts 4 – 6) have made lower highs and have not
yet reached up and even tested the overhead
resistance... For this reason these charts are
showing relative weakness.
▫️ In prior Macro Mondays it was made very clear that Charts 1 – 3 can provide advance warning of recession and or bear market declines ahead of charts such as 4 – 6. Charts 4 - 6 are showing relative weakness and appear to be lagging charts 1 - 3, for this reason revisiting this snapshot would be beneficial to see can we get a lead on the S&P500, Nasdaq and US Small Caps. This in turn could give us a lead on the entire market.
▫️ At present we are above the 200 day moving average on every chart and the 200 day moving average is sloping upwards ✅
- This is positive and would reinforce an ascending
triangle thesis however at this stage, looking at all
the charts a definitive break above the overhead
resistance line would be a preferred entry with
stop losses placed under that resistance line thats
been broken.
- A revisit of the 200 day moving average could also
be another entry consideration, simply because
again you have stop placed under the 200 moving
average, defined entries with defined stops under
them.
In summary, charts 1 – 3 can act as leading indicators of where price will go next in the general market. Charts 4 – 6 are showing relative weakness, potentially making lower highs however this could change in coming weeks as a strong green candle is challenging the recent highs. Ideally we want to see a definitive break above the overhead resistance levels and we would rather not see further overhead rejections or a breach below the 200 day moving average.
The beauty of Trading View is that you can revisit this exact chart on my page, press play and see if we have we broken through the resistance lines or fallen below the 200 day moving average, all at a glance. Be sure to make use of it to save you the time and effort of reviewing every chart. You can get a the jist of these major indices all with a glance. Regardless I will do my best to update you here on X.
If you like these broader analysis covering multiple stocks in particular index's or in particular sectors, please let me know.
What are the components of each index?
- This is for those of you who are unsure what each index is made up of and what they represent.
1. Dow Jones Transportation Index - DJ:DJT
- The Dow Jones Transportation Average (DJT) is a price-weighted average of 20 key transportation stocks traded in the United States.
- The transportation sector acts as a leading indicator as it is further up the value chain ahead of the final products being sold by companies in Dow Jones Industrial Average $DJI. For this reason, in some circumstances we can use the DJT as a helpful leading indicator for the direction of the economy
2. Dow Jones Industrial Index – SDJI
- The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes
3. Arca Major Markets Index - TVC:XMI
- The XMI is an overlooked chart often utilized by OG traders has been referenced by Sentiment Trader as a leading market index. XMI is a price weighted index consisting of 20 blue chip U.S Industrial Stocks, 17 of which are also in the Dow Jones Industrial Average. Within the index there is surprising blend of stocks that include transport, travel, food, pharma, energy and technology.
4. S&P 500 - CBOE:SPX
- The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices.
5. NASDAQ 100 - NASDAQ:NDX
- The technology index, the Nasdaq-100 is a market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index and includes the likes of NVIDIA and the MAANG stocks (Meta, Amazon, Apple, Netflix and Google)
6. US SMALL CAP 3000 - TVC:RUA
- Small-cap stocks are defined as having a market capitalization between $300 million and $2 Billion. Examples would be Upstart and Victoria's Secret.
Thanks guys
PUKA
