S&P 500 Warning Signs

Some suggest the S&P 500 move from the Mar09 bottom is the result of economic recovery, others sight excessive monetary stimulation. Regardless, its been an impressive run. The fact of the matter is nothing lasts forever, and the S&P 500 is providing a couple of very reliable warning signs.

S&P500 Chart, 26Sep13

The RSI has bumped into oversold territory three times during 2013, in Mar, May and again in Aug. The RSI is an extremely reliable signal and tends to provide a little early warning.  See the signals provided before the 2008, 2010, and 2011 corrections. If the RSI is right this time, we are on the threshold.

Another very powerful signal is the declining volume evident throughout 2013. A trend of declining volume on stronger prices is an indication of failing momentum.

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Posted in Equities, S&P 500, Uncategorized

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