The circles in the chart show where there is a gap (a space) between the 4 wk average (red dotted line) and the week’s high. That is often a sign of an oversold stock and the declining stock will often rise to kiss its 4 wk average before continuing its decline. The opposite is true for a rising stock. Look at the gap near the top in November. All of the major indexes have a weekly high below their declining 4 wk averages. So, I am waiting for the averages to rise a little by the end of the week so I can continue unloading mutual funds in my retirement accounts. The 30 week average (red solid line) is close to curving down. This is the critical signal that has enabled me to exit stocks before major declines. Normally tops take longer to form and there will be several rallies back to the 10 or 30 week averages. But this time there may be too many people waiting for a bounce to exit. (Thank you to my stock buddy, Judy, for teaching me about the 4wk average indicator of an extended stock.)
In case we forgot: “The Smoot-Hawley Tariff Act, enacted in 1930, worsened the Great Depression by raising tariffs on imports, prompting retaliatory tariffs from other countries, and significantly reducing global trade, which further crippled already struggling economies.”
