U.S. Stock Market: Is The Long-awaited Correction Finally Underway?

In the universe of about 300 relatively active securities that I closely follow, preliminary monthly chart sell signals have been triggered by my computer trading system in the following stocks and indexes: AMD, ALL, BAS, DHI, FWLT, KMB, LLTC, MCHP, MO, QCOM, IWM, Russell 2000 Index, SNDK, and YUM.

For your review, I have attached the monthly chart for Qualcomm (QCOM) and the Russell 2000 Index with all signals generated by my computer trading system. As mentioned in previous columns, the accuracy of signals generated in the Russell 2000 Index has been nothing short of amazing!

Official weekly chart sell signals were triggered last week in the following stocks (and one ETF): AB, BRCM, KO, F, HON, RTH, SMH, TPX.

The latest weekly charts for the Semiconductor ETF (symbol SMH) and Honeywell (HON) are shown below along with all signals generated by my computer trading system.

Bottom Line: It looks to me like a major stock market correction is now underway!

Russell 2000 Index Monthly Chart with Computer-generated Buy & Sell Signals

Qualcomm Monthly Chart with Computer-generated Buy & Sell Signals

Honeywell (HON) Weekly Chart with Computer-generated Buy & Sell Signals

Semiconductors ETF (symbol SMH) with Computer-generated Buy & Sell Signals

Russell 2000 Index Monthly Chart Sell Signal Still Intact

As reported to readers in a special update late Thursday, July 17th, a preliminary monthly chart sell signal was triggered by my computer trading system in the Russell 2000 Index at Thursday's close. While Friday's rebound placed this sell signal in jeopardy, it remains intact (just barely) for now. As mentioned in Thursday's column, this sell signal will abort with any meaningful advance in the Russell 2000 from Friday's close.

Without going into the details, I think it's fair to say that most international news recently has been negative for equity prices (Ukraine/Russia, Israel/Gaza, Europe/Portugal Banks, etc.), while domestic U.S. earnings news has been mostly positive for equity prices recently. Throw in $2 trillion in merger activity so far this year, and it's not hard to rationalize the bullish view.

The S&P 500 Index is up 7.03% year-to-date so for in 2014, and most other major indices are also up nicely. However, the Russell 2000 Index is down 1.03%, as small-cap stocks have mostly underperformed large-cap stocks. The big surprise to many, I suppose, is that gold/silver mining stocks are currently the #1 performing sector, with a year-to-date gain so far of 21.19%!

So where do we go from here?

For now, I am staying with my computer-trading system, which currently has more than a few interesting sell signals now in force. For your review below, I have attached three of the more significant charts.

1. Russell 2000 Index Monthly Chart, which now reflects a preliminary sell signal for July 2014. If this becomes official on July 31st, then this sell signal would be the first since July 2007, the exact top of the last great bear market.

2. Dow Jones Industrial Average ETF Daily Chart (symbol DIA), which reflects a sell signal from Thursday, July 17th.

3. Nasdaq Composite Index Daily Chart, which reflects a sell signal from Monday, July 7th.

Russell 2000 Monthly Chart with Computer-generated Buy & Sell Signals

Dow Jones Industrial Average ETF Daily Chart (DIA with Computer-generated Buy & Sell Signals

Nasdaq Composite Index Daily Chart with Computer-generated Buy & Sell Signals