Two Major Forces Collide in the Index Markets

On Wednesday, 11/11/09, the Dow Jones Industrial Index rallied to a 50% retracement level based on MarketClub's Fibonacci measuring tool. The action today indicates that this level is very important and that it could be an important top for this market.

In my latest video I cover both the Dow and the S&P 500 and tell you what I think is going to happen to both of these markets in the near and intermediate term.

As always our videos are free to watch and there's no need to register. We would, however, like to get your feedback as to what you think is going to happen to these two important markets. Please feel free to comment on our blog.

Adam Hewison
Co-creator, MarketClub

22 thoughts on “Two Major Forces Collide in the Index Markets

  1. Adam,

    Thanks for the video. I am on the sideline and have been waiting for a downturn to buy back in. it has been frustrating and certainly has tested my patience given the trend upward. With the latest surges the past three days, has it change your expectation on the head and shoulders thrending to a downturn in the near future? Also, do the low dollar continue to catalyst this thing beyond your technical numbers.
    Appreciate your feedback.

    1. Shawn,

      Thank you for your feedback.

      Take a look at my new video which should be coming out on Thursday, 19 November on that very same subject.

      Until then all the best.


  2. Adam-

    Thanks for the videos!

    While sixty percent of the equity positions I follow have a green monthly and weekly triangle, I am not putting any more cash into equities at this time due to your cautionary thoughts on the downtrend and 50% fibonacci level. Stops are in place. What percentage amount would we need to break through the downtrend line before the overall market sentiment on a technical basis change to the positive? Has this happened before?

  3. I should note one more thing here. The Dow did not come down and actually touch the 90 day ma. If the market gets through the 500 day ma, this could result in a blow off top, Elliot 5th wave move. Beware the final rally possibility.

  4. Key also for Dow. 500 trading days below 500 day moving average and now right at it. I find this type of analysis VERY useful for calling turning points. Even better than trendlines often. No doubt this is a critical moment for the Dow either way. Also note the tightest MA for last 7 months is 90 day. This is key and a violation of it would be significant.

  5. Terry,

    Thank you for your feedback.

    The longer term trend contiues to be negative for the US Dollar in my opinion. The counter-trend rally that we are in is similar to others we have seen in the past.

    Here is how I see the markets: Equities = skeptical that the rally can continue. Gold = long-term bullish. US Dollar = long-term bearish.

    All the best,

  6. Hey Adam,

    Thanks for your excellent videos. Recently you have been talking about the Dow and S&P topping out with Gold at a temporary high. A couple of months ago you did a video on the $US showing an approximate low target of $0.72. Given that we have seen an inverse relationship between the $US and Stocks and Gold are we now decoupling or have we seen a temporary low in the $US? If the $US does move lower will we see the markets and Gold continue to move higher?

  7. Michael,


    As I said in my video we do not have a sell signal in place and our Trade Triangle technology is positive on the market.

    The video was meant to show something that no trading system can anticipate and that is the art of classical technical analysis. The downtrend line and Fibonacci retracement are what I consider to be an interpretive analysis.

    All the best,

  8. Thanks for keeping us up to date on the markets. Your videos are great.

    After viewing the video I went back to the SP500 and Dow charts. You mentioned on the video that neither chart has given a sell signal yet but both have given a weekly green triangle within the last week. Is this what you would call a divergence between price and the indicators?

  9. Keith,

    Thanks for your feedback. Trying to pick tops or bottoms in a market is as you say a frustrating business and not the way to trade. It's pretty much what I said in the video as there has not yet been a defined signal that the market is headed lower.

    All the best,


  10. What I have found is that trying to trade tops and bottoms can be pretty frustrating. The reason is that a trend is not firmly established and price could easily move either way. So it makes sense to wait on the sidelines to let the markets show by TESTING AND FOLLOWTHROUGH if this is indeed a confirmed top or if the manipulation will continue and price go on up from here. Price action looks very toppy to me...but then again I have seen so many times on this rally from March lows where goldman came in to buy futures to shore up a market that obviously wanted to go down. So best to wait just a bit before getting fully committed to getting short. Historically when the fed has a very accomadative money policy (like now) the mkt has moved higher...will this time do the same?

  11. Dear Adam

    I absolutely LOVE your videos and cannot tell you how much you are gme in my learning curve. I am an auusie living in Perth Western Australia - home of iron ore - pilbara region anyway. We are a resource economy and I am wondering if you could take a little squizz at our asx200 chart. Looks like head and shoulders. Would you consider doing any videos on the aussie chart? I do not trade internationally as yet as I am only learning and doing a night stock course (basic tech analysis) at college here. LOVING it.

    WE have lots and lots of foreign monies pouring into Aussie in one way or another cos of our high dollar which seems to be following the gold chart, high interest rates and stable(ish) economy.

    Love your work and would love to join once I know a bit more.. may thanks.
    Western australia

  12. Adam,

    This was another excellent video. I think you have done several really good ones lately. I've been bearish on this market for a couple of weeks a probably missed some recent upside, getting a little short a little too early. But it hasn't been easy sticking to it in the face of so much optimism. I'm feeling much more confident with my after your video. These are great lessons for those of us that are learning the art and science of technical analysis and the business of trading. I'm also making good use of the new charts and use the INO site daily for updates in the commodities markets. Thanks for your continuing efforts.

    Cheers, SM Toronto, Canada

  13. Hello Adam,
    Thousand thanks for all those video and all your comments, sometime I change position when I listen to you, better to act then not act, defensively I meant.
    Let me present my self, I use to be a professionnal trader from 81 to 92. And when I saw those waves on the chart I could not resist 😉 and get back in October 2008...what a those waves, But this market is faster then in my days !
    Like you said Adam, the direction is not set, there is no sell signal,and my portofolio is set to accept a 50 points drop on the nasdaq (next down level up to me). So I stay long for the the first half hour tomorrow morning.
    Don't forget that tomorrow is Friday the 13TH, and it is always a different day, hope it will be a good day for money, and personnally I think this market will beat the odd, up again ! that's mt bid
    Thanks again Adam

    PS: By the way Adam, is there a way to fix on the chart,the reverse split (4X1) that happen on monday on GLG <<toronto<<.. soon on Nasdaq ..those guy need has to go up 😉

  14. Adam - I noticed when you do your videos, you use linear charts no matter what the time frame. Wouldn't it make sense to use logarithmic charts for long term charts, and linear for short term ? Your video today shows we're at or very near resistance for the S&P when using linear over several years, but logarithmic shows resistance at 1150 over several years. Can you please explain why you're using linear the way you do ?

    Also, I'm a paying member - is there any chance you will ever have your charts expand to full screen instead of just expanding horizontally and not vertically ?


    1. Bryan,

      Thanks for your feedback.

      I have always used linear charts and I am just used to them. I guess old habits die hard.

      As for full screen charts I am pretty sure it is on the drawing board but I will remind our tech team about your request.

      All the best,

  15. A very timely and excellent shapshot on both the Dow and S&P's "happenings"....extremely valuable for the trading fraternity, I should add. Thanks for the valuable insights.

  16. Hello everyone,

    Another great video, my emotions are telling me that this could well be the top –very dangerous mixing emotions into analysis/ trading....
    Anyway, I’m on the sideline awaiting confirmation in the conform that if this is the top (nice 50% on fib and good downward sloping trend line- i can just see the technical traders dancing in the street) then we’ll all have plenty of time to short the equities. Encouraging to see the dollar hitting some support, a change in the tide maybe?.....

    Quick question: I’m finding it difficult to know which chart (Dow, S&P or Nasdaq etc) to analysis as a good indicator of direction. I find analysing all of them leads to conflicting conclusions? Which one do you consider to be the leader? Does one become more reliable in a certain time frame?

    (I’m going to start the trial- very impressed with the site)
    Many Thanks,

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