The indicator summary would be much more negative were it not for strength in the NYSE breadth statistics. NYSE Net New Highs remain positive and the AD Line has yet to break down. Another decline next week would likely push these two indicators into bear mode. Another decline next week would also push the volatility indices above their July highs and into bear mode. As noted in the SPY update today, my only concern is the feeling that sentiment is overwhelmingly bearish on stocks right now. The bearish crowd is getting big and Mr Market has a habit of proving the crowd wrong.
- AD Lines: Neutral. The NYSE AD Line moved to new highs in early August (bullish), but the Nasdaq AD Line formed a lower high in late July and early August (bearish).
- AD Volume Lines: Bearish. The Nasdaq AD Volume Line formed a lower high in late July (bearish) and the NYSE AD Volume Line did not hold its breakout (bearish).
- Net New Highs: Neutral. Nasdaq Net New Highs remain negative and the cumulative Net New Highs line is trending lower (bearish). NYSE Net New Highs remain positive overall and the cumulative Net New Highs line is trending higher (bullish).
- Bullish Percent Indices: Neutral. The Nasdaq BPI is below 50%, but the BPIs for the other major indices are still above 50%. Four of the nine sector BPIs are below 50%, including finance, consumer discretionary and technology.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and Nasdaq 100 Volatility Index ($VXN) are still trending lower and have yet to break their mid July highs.
- Trend Structure: Bearish. DIA broke its June highs, but QQQQ, SPY and IWM failed at or below their June highs.
- SPY Momentum: Bearish. MACD(5,35,5) and Aroon remain moved into negative territory this week. RSI moved back below 50 the previous week.
- Offensive Sector Performance: Bearish. The finance, consumer discretionary and technology sectors are lagging. Industrials sectors are still holding up relatively well.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio has been moving lower since early June.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio has been moving lower since April.
- Breadth Charts have been updated (click here)
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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