One Reason The Dow And S&P 500 Continue To Trade Higher

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The Federal Reserve balance sheet has expanded to $7.708 trillion during the week of April 5. This is up 105% since the week of August 26, 2019. During this period, the S&P 500 is up 43.8%. As the balance sheet increases the stock market rallies.

Today the weekly charts are positive for four of the five major equity averages. The Dow Jones Industrial Average and S&P 500 are above all levels from my proprietary analytics. The others have monthly risky levels for April.

Let us look:

The weekly chart for the Dow Jones Industrial Average (.DJI) is positive but extremely overbought. It is well above its five-week modified moving average at 32,756. Its 12x3x3 weekly slow stochastic reading is 93.37, well above the overbought reading of 80.00 on a scale of 00.00 to 100.00. This puts the Dow in an inflating parabolic bubble. Its quarterly value level is 30.546 with semiannual and annual pivots at 32,644 and 33,425, respectively.

The weekly chart for the S&P 500 (.SPX) is positive but extremely overbought. It is well above its five-week modified moving average at 3,991.64. Its 12x3x3 weekly slow stochastic reading is 93.10, well above the overbought reading of 80.00. This puts the S&P in an inflating parabolic bubble. Its annual, quarterly and semiannual pivots are 3,932, 3,809 and 3,785, respectively.

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The weekly chart for the Nasdaq Composite (.IXIC) is positive. It is well above its five-week modified moving average at 13,522.00. Its 12x3x3 weekly slow stochastic reading is rising at 63.28. Its quarterly, semiannual and annual value levels are 13,001, 12,395 and 12,000, respectively.

The weekly chart for the Dow Jones Transportation Average (.DJT) is positive but extremely overbought. It is well above its five-week modified moving average at 14,264.89. Its 12x3x3 weekly slow stochastic reading is 96.10, well above the overbought reading of 80.00. This puts Transports in an inflating parabolic bubble. Its annual, quarterly and semiannual pivots are 14,425, 12,177 and 12,121, respectively.  

The weekly chart for the Russell 2000 Index (.RUT) is neutral. It is above its five-week modified moving average at 2,235.90. Its 12x3x3 weekly slow stochastic reading is declining at 71.28. Its annual, semiannual and quarterly pivots are 2,120, 1,880 and 1,855, respectively.

Here’s today’s scorecard: