Stock Market Technicals: Bearish Engulfing Pattern Is Cause For Concern

It's been a while since we last took a look at the market's technical picture so today we're highlighting MarketClub's latest market analysis video. In it, they highlight a signal that has typically preceded strong market declines. They're currently cautious on the stock market and derive this stance from two signals: a bearish candlestick pattern that just emerged as well as a strong level of support that's about to be broken. You can see their latest analysis in the video.

Let's first focus on the negative candlestick pattern they've identified. MarketClub pulls up a weekly chart of the Nasdaq and notes a negative/bearish engulfing line, a pattern whereby the previous bar is completely eclipsed to the downside. This marks a temporary top around the 2,350 level in the Nasdaq. This is important because they point out this same pattern signaled a sell-off in early May. If that's not enough to elicit concern, they point out another previous time where this pattern preceded a decline. Back on October 15th, 2007, a bearish engulfing line marked the beginning of what would be a massive downtrend during the financial crisis.

Turning next to support levels, MarketClub identifies 2,200 on the Nasdaq as a key place to keep an eye on. If it closes below that on a weekly level, the market is most likely headed lower. Throughout May and June, this level has been tested to the downside numerous times and looks like it is on the verge of breaking. Lastly, they highlight that their proprietary trade triangle indicators are signaling a negative trend, thus suggesting a cautionary stance on the markets. You can view their stock market technical analysis by clicking the video below:

Nasdaq Crosses Major Trend Line (NDX)

The guys over at MarketClub just highlighted an interesting fact: the Nasdaq just crossed a major trend line. Check out their Nasdaq technical analysis here. One of the most basic tools in technical analysis is drawing a trend line on the chart. To do so, all you need is to connect 3 points. Then all you have to do is buy/stay long as long as the trend remains. Once it breaks, get out/go short. As they say, "the trend is your friend"... until it isn't. In this case, the Nasdaq has broken it's current trendline as evidenced by the chart below:



This trend line has been in tact for almost 11 months now. The longer the trend line is, the more important it becomes. MarketClub makes special note of this because the momentum appears to have slowed down. Using fibonacci retracements, they've outlined a downside target of 1,796 or even 1,691 which would imply quite a large correction. Head here to watch their Nasdaq video.

Technical Analysis: S&P 500, Dow, Nasdaq & Gold

Marketclub just pumped out a bunch of technical analysis videos on the major indices as well as everyone's most watched precious metal. If you want to see how the charts are shaping up, Adam walks through the technical patterns in each video. He takes a step back and gives a broad overview as to what he's seeing in the markets and looks at formations, fibonacci retracements, MACD, and other indicators. Here's the videos:

- Technical analysis on the S&P 500

- Checking out the Nasdaq & Dow charts

- Gold has been on a rampage, check out the latest chart


Great overview in each of the vids. Enjoy and let us know what you're seeing on a technical level too.

Nasdaq Bumps Into Resistance At Fibonacci Retracement

The guys over at MarketClub have done some more technical analysis on the Nasdaq chart and are looking closely at a possible shift in the Nasdaq here by using Fibonacci retracements. They believe that index is in a secular bear market and you can watch the Nasdaq video update here. Using Fibonacci retracements from the high in October of 2007 to the low in March of 2009, the retracement levels start to tell us something. Currently, we've encountered the 50% retracement which could potentially be a problem. The Nasdaq has already reversed after bumping into this level once so it looks like some solid resistance there. They also point out a slight divergence where the MACD turned down (negative) early while the Nasdaq continued higher. These divergences are typically early warning signs and are another reason to get cautious here. It's still too early to say whether this is a big reversal and start of a new trend, but things aren't necessarily looking rosy right now. Check out their analysis in their video update on Nasdaq fibonacci retracements.