TEST OF SUMMER LOW LOOKS LIKELY -- LONG-TERM STOCK INDICATORS REMAIN BEARISH

STOCK INDEXES NEAR TEST OF SUMMR LOW... Hotter than expected inflation numbers this week pushed interest rates sharply higher and stock prices sharply lower.   The daily bars in Chart 1 show the S&P 500 falling to the lowest level in two months and nearing a likely test of its June low.  The SPX is back below all moving average lines, and its daily MACD lines in the lower box also turned negative.   Although the size of the stock plunge on Tuesday may have been a surprise, the general trend lower wasn't.   That's because longer-range technical indicators remain bearish.

WEEKLY DOWNTREND INTACT...The weekly bars in Chart 2 show the summer rebound in the S&P 500 failing at its 40-week (200-day) moving average and a falling trendline drawn over it 2022 peaks (blue arrow).  That failure kept its weekly downtrend intact.  In addition, its moving averages lines remain in bearish alignment.    Heavier trading volume on down weeks is also consistent with a market downtrend.   Weekly MACD lines in the middle box which turned positive over the summer may be about to turn negative again.  More importantly, monthly MACD lines remain negative.

MONTHLY MACD LINES REMAIN BEARISH... Monthly indicators are usually the most important because they measure major long term market trends.   And they remain bearish.   Chart 3 shows monthly MACD bars  in deep negative territory.   That can be seen more clearly by the red MACD histogram bars which measure the spread between the two MACD lines.   The monthly histogram  bars turned negative near the beginning of the year and have fallen to the lowest level in twenty years.  And show no signs of improving.   That carries a negative message for the market's major trend.