List Of Warning Signs For The US Stock Market

Is the US stock market ready for a larger correction? The followings are 10 warning signs:

1. Half of Dow Jones Industrial Index components are in  down trend. Components that are trading below their 200 day moving averages are BA, GE, MCD, PF, UTX, WMT, PFE and KO. Componets that are trading below their 50 day moving averages are JNJ, TRV, AXP, DD, CAT, V and MMM.

2. The Russell 2000 is on the verge of breaking its 200 day moving average while the Dow is on the verge of  breaking below its 50 day moving average.

3. Major and influential stock sectors that are in down trend : Semiconductor (SOXX), Industrials (XLI), Home Builders (XHB), Retailers (XRT), Consumer Staples (XLP) and Shipping (SEA).

4. 10 year treasury yield jump significantly on concern that interest rate are rising on the news of better than expected 2nd quarter GDP.

5. Major European stock markets such as Germany, UK and France are forming bearish Rounding Top Patterns. Their weakness will likely negatively impact the US market.

6. Second quarter earning reports are winding down. There will be lesser positive news to help the market. 

7. European Union and US have executed economic sanctions against Russia.

8. Argentina is technically in default and may bring about financial crisis.

9. Geographical unrest still going on in Ukraine, Gaza, Syria and Libya.

10. August and September combine are the worst 2 months for stock since 1950.