Another Bottom | Stock Market Investing

Sunday, June 8, 2008 | Home | Andy Mayo

Commodities rallied last week, the stock market gyrated and then headed south, leaving us with only one question -- will small caps will follow suit?

For the S&P 500, the head and shoulders pattern I originally posted still controls.  A visit once again to the 1270 range would not be unexpected.  Note the declining number of new highs in the lower chart.

Comparing the big caps to the small on a shorter time frame chart (60 minutes) presents quite a different picture:





For the mega caps -- the Dow Jones Industrial Average -- it looks like its divergence with the transportation average may be at end; unfortunately, transports may follow to the downside.  The Industrials are the falling red line in this chart.



The only bright spot is the Yen -- it has yet to break the neckline of its head and shoulders pattern, holding out a faint hope for US stocks.

Of course, oil's fantastic rise last week may just be the blow-off.  But don't count on it.

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