STOCK INDEXES MAY BE LOSING SOME UPSIDE MOMENTUM
SHORT-TERM MOMENTUM INDICATORS START TO WEAKEN... Stocks are still in the midst of a strong run that started in early November. But they're starting to look stretched over the short run; and may be vulnerable to some profit-taking. The two upper boxes in Chart 1 show the RSI and MACD lines for the Dow Industrials starting to flatten out after a strong November. Its MACD lines in the middle box are also in danger of turning negative.
Chart 2 shows the 9-day RSI line for the S&P 500 starting to weaken as well after touching overbought territory over 70. Its MACD lines in the middle box are also in danger of flipping into negative territory.
Chart 3 shows the 9-day RSI line in the upper box for the Nasdaq 100 (QQQ) starting to pullback from overbought territory over 70. If stocks do start to weaken, their initial downside target will be a test of their green 20-day moving averages which are usually the first line of defense during market pullbacks.


