The bulk of the evidence remains bullish for stocks, but this week's sharp decline put a dent in the bullish case. Some brief comments are posted after the jump. I will also be posting a market message later this afternoon.
-Net New Highs remain positive for Nasdaq and NYSE. Even though this is a lagging indicator, the bulls have an edge when new 52-week highs exceed new 52-week lows.
-The Nasdaq AD Line did not come close to its October high and formed a lower high. This negative is offset by the NYSE AD Line, which hit a new 52-week high last week.
-The NYSE and Nasdaq AD Volume Lines hit new 52-week highs this month and remain in uptrends.
-The McClellan Oscillators moved into negative territory, but did not plunge below -50 this week. I look for a move below this extreme to show strong selling pressure.
-All Bullish Percent Indices remain above 50%.
-The VIX and VXN surged to their highest levels of the year (2010). This rise in fear can be attributed to weakness and uncertainty in the large financial stocks. I am turning from bullish to neutral on this indicator.
-The overall trend remains up as DIA, IWM, QQQQ and SPY hit new 52-week highs this month. All four remain above support as well.
-Momentum indicators took big hits that need to be watched. RSI moved to around 40 and the Aroon oscillator moved into negative territory for the first time since early November.
-The tech and finance sectors are showing relative weakness in January, but the consumer discretionary and industrials sectors are holding up relatively well. These four offensive sectors are split right now.
-Small-caps are holding up better than large-caps because of relative weakness in the big banks.
-Bonds surged in January as money moved from stocks to fixed income. This shows a flight to safety that is negative for stocks.
-The Nasdaq AD Line did not come close to its October high and formed a lower high. This negative is offset by the NYSE AD Line, which hit a new 52-week high last week.
-The NYSE and Nasdaq AD Volume Lines hit new 52-week highs this month and remain in uptrends.
-The McClellan Oscillators moved into negative territory, but did not plunge below -50 this week. I look for a move below this extreme to show strong selling pressure.
-All Bullish Percent Indices remain above 50%.
-The VIX and VXN surged to their highest levels of the year (2010). This rise in fear can be attributed to weakness and uncertainty in the large financial stocks. I am turning from bullish to neutral on this indicator.
-The overall trend remains up as DIA, IWM, QQQQ and SPY hit new 52-week highs this month. All four remain above support as well.
-Momentum indicators took big hits that need to be watched. RSI moved to around 40 and the Aroon oscillator moved into negative territory for the first time since early November.
-The tech and finance sectors are showing relative weakness in January, but the consumer discretionary and industrials sectors are holding up relatively well. These four offensive sectors are split right now.
-Small-caps are holding up better than large-caps because of relative weakness in the big banks.
-Bonds surged in January as money moved from stocks to fixed income. This shows a flight to safety that is negative for stocks.
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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