 Hello traders at CMC Markets. This is Trevor Neal of ROG Research. I am presenting to you on the evening of Thursday the 17th and this is for Monday the Today we're going to look at stick with stock indices, mainly stock indices. We've got big rotation and which got to say that we did see coming. We saw the deterioration in the ROG charts of the US stock indices, particularly the tech stocks. We've been talking about that for several weeks. We saw the bearish divergences on the chart. So we'll have a look at that again. Now we're looking at Fibonacci retracements and the where the support levels are below, where this might end, how much of a correction are we likely to have. I would also look at the US treasuries because there's some sort of, to some people given the fall in inflation, a surprising move there and also the how the market, the sector rotation of the cyclical securities versus the staple securities is behaving. This is the people's reluctance to buy things which are discretionary as opposed to things which they need all the time like food. And this is showing up in the market too. So behind this stock market correction, there is also a sentiment in the economy as well that we can see. So that's what we're going to look at today. So let's get started with a look from the top at asset classes. Let us start right from the top. This is looking at asset classes using ETFs in order to represent the room. And you can see there's only one in the leading quadrant. That's the spider S&P ETF in the leading quadrant. In the improving quadrant, we've got the Dow Jones. We've got also the S&P small cap stocks as well, maybe turning up a little bit. Only just moving into the leading quadrant is the emerging market, but everything else, that's bonds, that's gold, that's Europe, is in the lagging quadrant. So US equities is the best place to be in the world at the moment. However, when we look at this weekly sampling of leading world indices, we see that we've got this movement, quite a swift movement down, a deterioration in the NASDAQ, also deterioration in the NICI, which has been driven by the currency there. The S&P versus the MSCI world, close to it, but blunted here. The Nifty is looking okay. The Dow Jones industrial average is in the improving quadrant, but with a short tail here, northeasterly direction, that's good. And then the Russell 2000 also rather blunted. The lagging quadrant is, and this is versus the MSCI world, is the DAX, the stocks, the CAC, the FTSE. Really, everything in Europe is down in here. Yes, US stocks are good versus the world, but they're not heading in a constructive direction, not in a northeasterly direction. And there's a deterioration here. There's a weekly sampling and we're going to look at this in the charts. We picked this up already a few weeks ago and this deterioration, but let's break it down now and look at some of the individual charts. Now, and the S&P chart, this is the daily chart of the S&P. Now we've seen the deterioration heading south in the ROG chart. And look what's happened here on the absolute chart. We have broken this key 4,450 level, broken it hard there. So this is a sign of some significant intermediate term top. The next support, which is minor, is at 4,385. But the big support comes from this low here at 4,340. This is also a previous high level. So that's a significant support level. And also it is approximately 4,300 is the 38.2% retracement of the advance from March to the high of last month. So I would say as a chartist, our teacher, this is that when you're looking for a retracement, I think it is a retracement in a bull market ultimately will continue on up. But we're looking at what is likely to be a severe retracement. You look for the first significant chart support level. And that is that previous high, this recent low, and also the 38.2. So the indication is here that we're heading towards the 4,300, 4,400 level. The MACD, it warned us. Remember, we were talking about this, the bearish divergence high, higher, lower height. So we had a strong feeling that this move had run its course at the beginning of this month. It has now turned down hard on the MACD and the gap is widening here. Now we saw the same with the bearish divergence in the RSI into this high here. And now we've come down hard and we're pointing down the still strong momentum on the downside. So this has deteriorated a lot with this one and looks like it's got quite a bit of room on the downside to come much lower. Now there's a daily chart of the Russell 2000 index. Now you remember from the ROG chart, it was in the improving quadrant and it was heading in a good trajectory when this was going on here, close to the high of the beginning of the year. But it reversed round and still inside the improving quadrant and reversed round warning us of this and this is what has happened now. This has deteriorated really awfully. It's tumbled from 2000 down to through the support at 1900. You would have expected it to respect that a little bit, but it didn't. And it's plunged further. It's gone through the 38.2% retracement of the rally from the March low. The next level, and usually if you break one Fibonacci level, we'll go to the next one pretty quickly, that's at 181847. However, really the support of any meaning doesn't come in until we're right down here in the 1800s. So we've got two highs in here at 1810. We've also got this low here at 1819. So 1820, let's call it there. So this is the area where significant support really comes in. So if it doesn't hold at the 50% level, 18,050, which is a sort of consolidation, then I think we're coming down to 1800 or 1820. This is a corrective move. I think we can still say that, but it's got a lot of power behind it. This is a really precipitous fall. Look at the MSED here. They've got widening in it. It's gaining momentum on the downside. RSI 2 plunge, plunge, but beware, we haven't seen this kind of reading in the RSI since March when we made the low. Yes, we can come lower, and I think it's likely we will, but beware that this is quite extended on its fall. The fall has been very rapid indeed in this one. Now to the NASDAQ. The NASDAQ 2 has tumbled. We were warned, and it has really come down hard. We saw the bearish divergence in it. We got high, high all through this until we had this lower high in here from the June high to the July high, the June high to the July high, and this warned us that there was lots of momentum into this top. The sell-off really started when the MACD crossed back at the end of July, middle of July, third week of July, sorry, the third week of July, and then it has tumbled since then, and now it's got a strong momentum on the downside with the gap widening here. The RSI, as you can imagine, it's the same. We didn't get a bearish divergence in it, but it has come down hard, and it is really down to the levels it was at these important lows back in March before its gigantic rise started. So it has broken the first level of support, which was this high from June at 15,200. It's broken that. It's deteriorating quite badly right now. The next support comes in at 14,600. It's not particularly strong. 38.2% retracement is 14,300, and we've got some support here at 14,200, but again, not very strong because this move was so rapid. There was very little trading at these prices. Very few people bought and sold things. I've got commitment to those levels because we moved swiftly through them. The pullbacks that we had were very small, and the balls took over very quickly. So we've got a lot of froth in this market. This one is holding up best so far as we see in the RRG. It's still the one furthest to the right in the RRG, but it is the most vulnerable to having a substantial back if it gets the bit between its teeth that the whole technology boom is over, and we're changing our mood from a very aggressive stance into a very defensive stance. A worry is also the bond market is the US 10-year yield chart, Treasuries yield chart, and inflation is cooling, and the government bond yield is increasing, and we're close to the highs we saw in October last year. I would say that the break of 4.25% is quite likely, but given the high level of momentum we've got here in the MACD, gap widening there, and on the RSI, soaring ahead here too. So we've got a lot of momentum here and trouble ahead potentially for the stock market as you have this risk-free, I say that in inverted commas, investment of US government-backed treasuries, and the cost of that is going up. The yield is going up, and a final word is looking at the relationship of cyclical stocks, so once which benefit from an aggressive outlook, a positive outlook for the market, and defensive stocks, the stocks that do well, things that people need to all the time food, and these sort of things, consumer staples is the main sector for this, and that people will always eat even if they haven't got much money, but other things like discretionary spending that we'll cut back on, so these tend to be quite cyclical with the economy. The yellow line on here is the USA, cyclicals versus divided by defensives. So when it's going up, the cyclicals, the things which we don't have to buy, but we choose to buy the luxury goods, and things like that, eating out, for example, as opposed to eating it is going up, but in the US it's just turned down here, so I wouldn't say it's a very strong definitive end of things forever, but it has turned down in recent weeks, in line with the stock market. People have become much more defensive in their spending, so this is not just a stock market related to correction, it's due to the sort of attitude of people and how they feel about the economy. There's also the case in Europe as well, the white line here is the case for Europe, cyclicals divided by defensives have been going up strongly, topping out, I'm not saying it's the end and we've had moves like this before, but it is, at this moment, the move in the indices, so this tradable indices, is reflected in the behavior of people and their views of the economy. I'll leave it there for this week, it's interesting, we've seen that follow through, we picked up the loss of momentum in RRG, three weeks, three, four weeks ago we saw those bearish divergences in the stock indices themselves, warning us that the highs that were made a few, only a few weeks ago were on low momentum and fragile, the markets have turned down in the US stock indices, only the Nasdaq is furthest to the right, but it's in the weakening quadrant and moving swiftly through that, only the S&P remains in the leading quadrant and that is moving south, so losing momentum. The Russell looked as though it was getting better but has turned down quite sharply and the chart looks terrible and all of the European stock indices are in the weakening quadrant, particularly the FTSE, which looks dire, so that's the background we've got, we've also got those structural problems with interest rates and also you can see with the cyclic rules how they're changing in their relationship showing that people are really heading for spending money only on the things that they need like consumer staples. I wish you a great week, thank you very much indeed for listening, this is me, Trevor Neal, I wish you all the best for the week, may the train be with you, goodbye.