A Confusing Picture in the Market

On the weekly chart of the S&P 500 Index below, three basic technical indicators have marked clear turning points in the intermediate-term trend of the broader market. At bottom of the chart are the relative-strength index, a measure of price momentum; the moving-average convergence-divergence line (MacD), a trend and momentum indicator; and Chaikin Money Flow, which calculates money flow in relation to closing price in an average range. I've also laid a 21-period simple moving average on the RSI and Chaikin indicators to act as a signal line.

S&P 500 -- Daily Source: StockCharts.com View Chart » View in New Window »

In posts over the last year, I have noted the crossovers, and they have been proven to be accurate turning points on the index. In addition, there have been normal sector rotations as the market has made the transitions. The performance chart below highlights the Sector Select SPDR ETFs, and it shows the outperformance of the materials, industrial and energy components relative to the S&P 500 during the first month following the bullish crossovers in October 2011....216 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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