The Nasdaq And German DAX Show Declining Momentum While 7 Other Global Averages Remain Positive


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The first day of the second half of 2017 ended with a Dow Theory Buy Signal. This old-school signal occurs when the Dow Jones Industrial Average and the Dow Transportation Average follow each other to new highs. Overly simplified, when the industrial giants of the Dow are making goods and the shippers are delivering them, all is well in the U.S. economy.


This time however, semiconductor stocks may have offset the positives of Dow Theory. While the Dow averages were chugging higher, the semiconductor index declined from bull market territory as June began, to correction territory as June ended. At the post-election high, the SOX (semiconductor index) was up more than 20% from its post-election low. From this high to the June close, the SOX declined by more than 10%. This is a warning for the tech sector, which includes the chip makers. Keep in mind that semiconductors are components of almost every product we buy, ranging from a new automobile to smartphones, which in my judgement is more powerful today than Dow Theory.


Looking overseas, Japan’s Nikkei 225 and China’s Shanghai Composite are attempting to assume upside leadership status. India’s Nifty 50 is the best performer among the nine global averages. The major warning comes from the German DAX, which begins the second half of 2017 with a negative weekly chart.

In the U.S., away from industrials and transportations, the S&P 500 and Russell 2000 are on the cusp of technical downgrades. So far, only the Nasdaq is showing declining momentum.

Here’s This Week’s Scorecard 


Scorecard For Nine Global Averages Scorecard For Nine Global Averages

Here Are The Weekly Charts From Around The World

The Dow Jones Industrial Average (21,320.04 on July 6) set an all-time intraday high of 21,562.75 on July 3, and has a positive but overbought weekly chart. The five-week modified moving average is 21,211 with the 12x3x3 weekly slow stochastic reading above the overbought threshold of 80.00. Buy weakness to my quarterly value level of 20,327. Reduce holdings on strength to my annual risky level of 22,041.


Weekly Chart For The Dow 30 Courtesy of MetaStock Xenith

The S&P 500 (2,409.75 on July 6) set an all-time intraday high of 2,453.82 on June 19, and has a positive but overbought weekly chart. The five-week modified m oving average is 2,415.39 with the 12x3x3 weekly slow stochastic reading above the overbought threshold of 80.00. Buy weakness to my quarterly value level of 2,322.6. Reduce holdings on strength to my annual risky level of 2,537.9.


Weekly Chart For The S&P 500 Courtesy of MetaStock Xenith

The Nasdaq Composite (6,089.46 on July 6) set an all-time intraday high of 6,341.70 on June 9, and has a neutral weekly chart. A weekly close below the five-week modified moving average of 6,142.26 shifts the weekly chart to negative if the 12x3x3 weekly slow stochastic reading falls below the overbought threshold of 80.00. Buy weakness to my quarterly value level of 5,733. Reduce holdings on strength to my annual pivot of 6.253.


Weekly Chart For The Nasdaq Courtesy of MetaStock Xenith

The Dow Jones Transportation Average (9,576.16 on July 6) set its all-time intraday high of 9.702.31 on July 7, and has a positive but overbought weekly chart. The five-week modified moving average is 9,375.73. Buy weakness to my quarterly value level if 8,817. Reduce holdings on strength to annual risky level of 10,167.

Weekly Chart For Dow Transports Courtesy of MetaStock Xenith


The Russell 2000 (1,400.81 on July 6) set its all-time intraday high of 1,433.01 on June 9, and has a positive weekly chart. The five-week modified moving average is 1,402.61. Buy weakness to my quarterly value level of 1,263.37. Reduce holdings on strength to my a nnual risky level of 1,548.95.

Weekly Chart For The Russell 2000 Courtesy of MetaStock Xenith

The Nikkei 225 (19,929.09 on July 7) remains shy of its June 24, 2015 multiyear intraday high of 20,952.71 by 4.4%. The weekly chart remains positive but overbought with the five-week modified moving average of 19,850.70. Buy weakness to my quarterly value level of 16,052.44. My annual pivot of 20,169.42 will remain a drag or magnet for the remainder of 2017.


Weekly Chart For The Nikkei 225 Courtesy of MetaStock Xenith

The Shanghai Composite (3,217.61 on July 7) remains deep in bear market territory, 37.9% below its June 12, 2015 mu ltiyear high of 5,178.19. The weekly chart is positive with the five-week modified moving average of 3,164.60. Buy weakness to my quarterly value level of 1,998.60. A monthly pivot is 3,262.57. Sell strength to my annual risky level is 3,879.39.


Weekly Chart For The Shanghai Composite Courtesy of MetaStock Xenith

The Nifty 50 (9,665.80 on July 7) set an all-time intraday high of 9,709.30 on June 6. The weekly chart is positive but overbought with the five-week modified moving average of 9,527.36. Buy weakness to my monthly and quarterly value levels of 9,372.53 and 8,727.92, respectively. Sell strength to my semiannual and annual risky levels of 10,215.5 and 10,545.21, respectively.

Weekly Chart For The Nifty 50 Courtesy of MetaStock Xenith

The Deutsche Boerse DAX Index (12,388.68 on July 7) set an all-time intraday high of 12,951.54 on June 20, and ended the week with a negative weekly chart. The index is below its five-week modified moving average of 12,537.21. Buy weakness to my quarterly value level of 11,055.97. Reduce holdings on strength to my annual pivot of 12,844.29, which will be a drag or magnet for the remainder of 2017.

Weekly Chart For The German Dax Courtesy of MetaStock Xenith

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