Summation Indices in a new longterm downtrend?

The NYSE Summation Index may be conforming to a new bearish trending pattern. The prior consolidation triangle broke upside in late 2006 but failed to confirm a new upleg in the market. Instead, a gradual deterioration over the first part of 2007 led to the development of a new downtrending pattern which remains in place as of today.

It is possible we could see this indicator drop to lows of -2,000 as part of the current decline, although historically it tends to zig-zag a little more; however, there is a reasonable chance we could see a new low below -1,577 for 2009. The 2008 low of -1,577 beat out the previous record low of -1,444 posted in 1998.

A similar shift is underway in the Nasdaq Summation Index; the broad uptrend from 1998 reversed to a downtrend, the anchor for the peak was the 2003 high. What will be the anchor low for the next uptrend? Is it in place at -1,668?

Whatever happens, there is a little to suggest the markets will be going up in earnest anytime soon.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website

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