Dramatic bearish bias shift in major market indices this week | decision point

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This week the market experienced a dramatic shift in bias. We measure medium-term bias using the Silver Cross Index (SCI). SCI measures the number of stocks that have a “silver cross” within an index, sector, or industry group, such as their 20-day EMA above their 50-day EMA.

When SCI moves below the signal line, the bias moves to BEARISH. This week we have seen every major market index we follow move into Bearish Biases except for the Dow Industrials. Similar activity has been observed in the sectors and industry groups we follow.

Once again, the bias change occurs because the Silver Cross index crosses below the 10-day EMA. This means that some stocks within a particular market index are experiencing a crossover below their 20/50-day EMA. If the 20-day EMA is lower than the 50-day EMA, the stock is at least in correction mode. The chart below is one I use every day to track bias changes. Obviously, most indices still have a high percentage of stocks holding silver crosses, but the current bias is bearish due to the move below the moving average.

conclusion: There is a new bearish bias in almost every market index we follow based on the Silver Cross index moving below the EMA. These bearish changes often precede longer downtrends. The weakness of these indices means that further collective declines will continue in the future.

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