STOCKS CONTINUE THEIR NOVEMBER SLIDE -- THE S&P 500 MAY RETEST ITS LATE OCTOBER LOW -- THE REASON SHORT-TERM RALLIES ARE FAILING IS BECAUSE WEEKLY CHARTS LOOK EVEN MORE NEGATIVE -- THE S&P 500 MONTHLY CHART ALSO SHOWS SIGNS OF WEAKENING

SHORT-TERM STOCK TREND CONTINUES TO WEAKEN ... Today's higher open is giving way to more afternoon selling. We've seen that same pattern over the past week as stock prices have started to slide again. The daily bars in Chart 1 show the S&P 500 Index falling back below its (red) 200-day moving average on Monday. Today's selling is pushing the SPX down toward a small price gap formed a couple of weeks ago between 2700 and 2685 (green box). A drop below that gap would signal a likely retest of its late October low. Its 14-day RSI line (top box) is back below 50. Its daily MACD lines (lower box) remain positive but are starting to weaken. That can be seen by the falling histogram bars. The problem with looking at daily charts and their indicators is that they only give us a small part of the trend picture. I believe in adding an analysis of a weekly chart to see which way that's trending. That's because weekly indicators carry more weight than daily indicators. And right now those longer range signals aren't very encouraging.

Chart 1

WEEKLY SIGNALS REMAIN NEGATIVE ... The weekly bars in Chart 2 show the last upleg of the S&P 500 uptrend that began in early 2016. And it shows that uptrend weakening. It shows the October price drop falling below its 40-week moving average (red line) by the widest margin in more than two years, and a rising trendline drawn under its 2016-2018 lows. This week's attempt to regain those two previous support lines is failing. The two weekly indicators in Chart 2 also paint a negative picture that suggests that the nearly three-year uptrend is in danger. The 14-week RSI line (top box) has fallen below 50 by the widest margin since early 2016. In addition, its third quarter peak fell well short of its early 2018 peak which formed a major negative divergence (purple arrow). Its weekly MACD lines (lower box) show a similar negative divergence (red arrow), and have since fallen below their spring low to the weakest level in more than two years. That's not a minor setback to the market's last upleg. It's a big one. That largely explains why short-term rally attempts aren't getting very far. Weak longer range signals on weekly charts are simply over-riding any short term rally attempts. Monthly chart readings aren't encouraging either.

Chart 2

MONTHLY INDICATORS ARE ALSO WEAKENING... Signals on monthly charts are even more important than on weeklies. And signs of weakness are showing up there as well. The monthly price bars in Chart 3 show the S&P 500 uptrend since the start of 2016. The down arrow in the top box shows the 14-month RSI line also forming a third quarter negative divergence from the SPX price which hit a new record high during September. Both of those 2018 peaks took place from overbought territory over 70, while the early 2018 peak was the most overbought since the nine-year bull market began in 2009. The RSI remains above the 50 line, but has fallen to the lowest level since 2016. The 2018 divergence from overbought territory suggests that the nine-year bull market is also losing upside momentum. The lower box shows monthly MACD lines in danger of turning negative for the first time in two years. That can be seen more plainly by the red MACD histogram bar which has fallen below its zero line (red circle). That means that the two MACD lines are now negative. Since Chart 3 is a monthly chart, however, no signal is final until the end of the month. And a lot can happen over the next two weeks. But the monthly indicators in Chart 3 do suggest that the market's major uptrend is starting to show some cracks as well. [FOOTNOTE: These same weekly and monthly divergences were shown in my message from Saturday, May 13 which suggested that the nine-year bull market might be peaking. Elliott Wave analysis also suggested a market top].

Chart 3