The U.S. stock market ended 2015 with all five major equity averages having negative weekly charts. When 2016 began, charts signaled the "year of the bear" had begun.
It may seem like we are in a bull market, and some say this market can't be taken down. But when the quarter ends Thursday, Friday -- April Fool's Day -- could show the bear hasn't really gone away.
The five major equity averages begin this week straddling their 200-day simple moving averages. The Dow Jones Industrial Average (INDU) , the S&P 500
The weekly charts are positive for the five major averages, but with negative divergences. The Dow 30 shows a downtrend connecting the lower highs since the all-time May 19 on 18,351.36. The S&P 500 also shows lower highs since its all-time high of 2,134.72 set on May 20. The Nasdaq is between its 50% and 61.8% Fibonacci retracements from the all-time high of 5,231.94 set on July 20 to the 2016 low of 4,209.76 set on Feb. 11. Dow transports and the Russell 2000 are still in correction territory 14.9% and 16.7% below all-time highs of 9.310.33 and 1,296.00 set on Nov. 28, 2014 and June 23, respectively.
The bulls will begin April still touting money printing and low to negative interest rates as reasons to be bullish on stocks. But buyers beware: When a central bank props up a market with monetary policies that do not work, those markets are doomed when investors begin to lose money.
Here are the daily charts for the exchange-traded funds that track the five major averages, including their Fibonacci retracements.
The SPDR Dow Jones Industrial Average ETF (DIA) , aka Diamonds.
Courtesy of MetaStock Xenith
The daily chart for Diamonds shows the Fibonacci retracements from the all-time high of $183.35 set on May 20 to the Aug. 24 "Black Monday" low of $150.57.
Diamonds ended last week at $174.94, up 0.5% year to date and 13.3% above the year-to-date low of $154.38 set on Jan. 20. The ETF is above its 61.8% retracement of $170.79 and above its 200-day simple moving average at $171.23. Note that the ETF is below a downtrend resistance at $176.59 that connects the highs going back to May 20.
Investors looking to buy Diamonds should consider doing so on weakness to $173.35, which is a key level on technical charts until the end of the week. Investors looking to reduce holdings should do so on strength to $177.66, which is a key level on technical charts for the remainder of March.