The US stockmarket is entering a critical technical phase given the Dow Jones generated a technical sell signal mid last week, and the S&P500 has the potential...

The US stockmarket is entering a critical technical phase given the Dow Jones generated a technical sell signal mid last week, and the S&P500 has the potential to follow suit. As detailed in previous wires, the key US indices had been extremely overbought on a momentum basis, which has been an ongoing and key reason for the cautious technical view relating to the sustainability of the US market rally. Parallels have existed between the recent overbought US market conditions to that which had prevailed in late 2007. To indicate the timing of when the US market has turned, technical top formations need to be generated on the key US index charts. This has now occurred on Dow, with only a minor further sell off required on the S&P500 index to also trigger a technical sell signal.