The broad stock market continues to look like it is topping out here following a bear market rally, and it is easy to see how it could drop if the Fed maintained rates at their current relatively high level or even raised them in accordance with the plan to wipe out all the smaller banks and consolidate their assets into the biggest banks to facilitate the implementation of the CBDC (Central Bank Digital Currency) banking system.
On the 1-year chart for the Dow Jones Industrials, we can see how the market has formed a line of descending tops beneath the resistance level shown in recent months and looks set to drop from the latest peak.
Any significant decline from here would quickly roll the moving averages over from their current modestly positive alignment into a bearish alignment. The bearish implications of this chart would be mitigated if it should succeed in breaking above the key resistance, which is viewed as unlikely.
While the 1-year chart for the S&P500 index looks somewhat better than that for the DJIA, it doesn't exactly look great either.
After what is believed to be a bear market rally from the October low, the market looks like it is rolling over in readiness to drop, with upside momentum fizzling.
Note that trading volume and the Accumulation lines have been omitted from both these charts because the volume is next to useless on these index charts, and the Accumulation line is notoriously unreliable, and it is suspected that it may be rigged somehow.
We have observed over the past couple of weeks how the precious metals sector is set up to correct hard, and if the broad stock market does drop steeply going forward we can expect the PM sector to get dragged down with it, but such a correction in no way detracts from the stellar prospects for the sector once this immediate corrective phase is done.
Originally published on clivemaund.com on May 16, 2023, at 11:55 am EDT
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
