John Roque is hands down one of the best Technicians in the Business. I think that the way he able to explain what he is seeing in the charts is second to none. The Chief Technical Strategist at WJB Capital and was on CNBC last night talking technicals.
Everyone keeps talking about this Death Cross for the market. This is when the 50 day Simple Moving Average crosses below the 200 day Simple Moving Average. A lot is made of this particular indicator even though last time we had this “sell signal” (Last July) the stock market rallied 30% very quickly ($SPY). What is more important to take note of is NOT the cross, but the actual slope of the 200 day moving average itself. John Roque points out that the 200 day is currently rolling over and THAT is the negative aspect of this whole thing.
Roque goes on to discuss how we are in a reversion beyond the mean business, and not just to the mean. In this case, the Financials ($XLF) as a percentage of the S&P500. He thinks we test the 2009 lows of 8.5%.
Going forward Roque points to Freeport McMoRan ($FCX) as a tell for the rest of the market, specifically in the Industrial Space ($XLI). The Industrials look weak here and there is risk of more downside pressure.
Here is the video in full: