Stock index lower, Oil and Gold lower

spy0812.pngStock reversed down on another Tuesday turn-around. The S&P etf chart to the left shows the gradual new uptrend, as defined by the blue moving average lines. You can see the declining volume on this advance, compared to the increasing volume on the decline into mid-July. Short-term momentum has turned down from the overbought area. There is a slight divergence, but these divergences can be misleading. Price looks like it wants to go back into the area of the moving averages, and as long as they stay positive, there could be indications of more tests to the upside, but (in my opinion) within the context of a larger down-trend. Oil might be getting a bit overdone on a short-term basis, and if there is some rebound, that could trigger the pull-back into the moving averages, and would hopefully pull the momentum indicator back down. In my opinion crude oil still has a lot of downside, but markets usually go back and forth within the trend, and sentiment has gotten negative very fast. Some counter-trend movement wouldn’t come as a surprise after such a fast move down. Gold has been clobbered even more, with prices now back to 2007 levels. But at the moment the stock indexes seem to influenced more by crude oil than other commodities, and of course still influenced by the financials.
adv0812.pngI also wanted to show the same S&P etf with the advance/decline ratio in the sub-graph. The ad line has stopped going down and seems to be drawing a sideways line as the S&P prices are trying to trend upward. If a longer term uptrend is to emerge, the ad line should start an uptrend as well. If the ad line stays sluggish, it is further evidence (at least in my opinion) that prices are not ready to go far on the upside.
Also, for long term investing, check out this video (click link and then click you-tube image when it comes up in other browser). It is Ed Seykota singing his trading rules. It’s funny, and some good basic advice.

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