The VectorVest Composite of the entire US market charted the most long term (and bearish signal) on VectorVest during the last trading week. The US markets have now been within a Confirmed Down signal for the past four trading days. There was a lot of warning of the reversal as the Primary Wave and the DEW market timing systems had given sell signals in the previous week. These signals arrive in a very predictable order on VectorVest, reversal after reversal, and it’s vitally important that all reading understand this sequence.
First of all the short term trend or Primary Wave turns from Up to Down. At that point we are in a Down/Up trend. Next a red light appears in the price column of the Color Guard which indicates that the price has fallen day over day and week over week. Further weakness will be noted when a black star is spotted within the red light. The black star shows that the turn down is supported by momentum increasing to the downside. Next the DEW market timing system prints a sell signal. Finally if the reversal continues the most conservative and long term system (a confirmed call) is printed. All of these timing systems can be applied to the VectorVest Composite by clicking on the drop down below the chart. Please call support on 0800 014 8974 in the UK and 0800 981 891 in SA if you cannot locate or apply these signals to your charts.
A reversal from down to up is a mirror image of what I have written above.
A cocktail of a stronger oil price, commodity strength and a weaker pound has caused the London market to present a totally different picture to that of the USA. In London not that much has changed since I analyzed the situation last weekend. The trends are positive with both short term and underlying trends upwards. The UK market has been within a confirmed up technical scenario since the last weeks of February 2016.
On the VectorVest Composite UK the lows of the week were determined by support arriving based on a trend line drawn from the Brexit low. This trendline has now four major touches. The highs of the last week were defined by a 1.27 expansion of the last range. The very bearish “butterfly” pattern I described in detail last weekend is still present. The bearish normal divergence between the MTI and the price of the Composite is still in play with the divergence becoming more marked since I last wrote about the pattern.
The chart of the VectorVest Composite UK is shown below. The trends are positive but the divergence still worries me. In my portfolio I will continue to follow the advice on the front page of VectorVest and hold. Please watch carefully for any reversal as defined by the sequence that I detailed above. Also a close below the trendline shown in the chart would be a serious deterioration of the technical picture. Any sell signal from the Composite that is preceded by bearish normal divergence has a high probability of turning into a strong selloff.
Be very careful with open profits.
Thanks to all who came and supported us at the Investors show in London yesterday.
October 15th 2016
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