Descending MA Trifecta Next?

Once in awhile I come across one of those technical indicators that constitute an epiphany in my analysis of the markets. I knew about this one, but somehow it got overshadow by all the other TA noise one hears from day to day.

It's called the MA Trifecta and pertains to what happens when 30, 50, and 200 (Day/Week/Month.. etc) Moving Averages all "roll over" into a declining trend and how reliable of a signal that is.

Descending MA Trifecta

Visit the chart link below and adjust the time frequencies to 5 year, then 10 year, inputting SPX, INDU, RUT, and QQQQ which represent the major indices.

Daily Chart Template

Now use the Weekly, All-data settings and the above symbols. Here's a weekly chart template:

Weekly INDU Chart Template

Also, note that the INDU chart shows the 50 Week MA NEVER made it above the 200 Week MA after the 2008-2009 crash. Now change the settings to "1 year, weekly" and you'll see that the all three averages are declining. That's the "Trifecta" and as you've seen from back testing in the links above, IT'S A POWERFUL INDICATOR THAT IS SELDOM WRONG about the direction of the market.

And the 100 week MA reverifies this trend:

100 Week MA chart template

The only way the MA Trifecta gets busted is normally when the shortest term (30 period) changes direction. And, as always, the longer the time frame (day, week, monthly.. etc) the stronger the signal and the longer it will take to reverse.

And btw, this also works to the upside for identifying UPTRENDS, so it's good to remind oneself and revisit the basics of Technical Analysis.

Ok.. so minus some miracle of positive event related news, it would appear that we're going to continue the downward trend in coming weeks. We have continuing follow through selling in Asia, but not to the same degree as last night. We'll have to see how Europe's markets perform, as well as the Euro and USD ratio. The Euro has resumed its previous decline and that puts upside pressure on the USD (making our goods more expensive to sell overseas).

Furthermore, we saw tremendous buying of US Treasuries, bringing the yields (interest rate they pay) down over 20% on the 10 year bond. That's a sign of panic buying and flight from equities.

Continue to watch the Perfect Stock Alerts (no affiliations between us) market videos.. They're informative, understandable, and entertaining.

Scrutinizer