The indicator summary remains positive, but there are a couple of concerns. First, relative weakness in the finance cast a cloud over the current advance. Second, the Nasdaq has been underperforming the NY Composite the last two weeks. This may be just a pullback. Third, the Dow Industrials SPDR and the Nasdaq 100 ETF (QQQQ) are hitting resistance from their April highs. Stocks have risen five of the last six weeks and are still ripe for a pullback or consolidation.
- AD Lines: Neutral. The NYSE AD Line hit a new 52-week high again this week (bullish), but the Nasdaq AD Line remains below its August high (bearish).
- AD Volume Lines: Bullish. The NYSE AD Volume Line moved sharply higher the last two weeks (bullish) and the Nasdaq AD Volume Line formed a high-level consolidation (bullish).
- Net New Highs: Bullish. Nasdaq and NYSE Net New Highs remain firmly positive and the Cumulative Net New Highs lines are moving higher (bullish).
- Bullish Percent Indices: Bullish. Except for the finance sector, all index and sector Bullish Percent Indices are above 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and Nasdaq 100 Volatility Index ($VXN) remain in downtrends. Falling volatility means lower risk, which is bullish for stocks.
- Trend Structure: Bullish. QQQQ, SPY and DIA formed higher lows in late August and higher highs in September. IWM edged above its summer highs the last two weeks (bullish).
- SPY Momentum: Bullish. MACD(5,35,5) and Aroon (20) moved into positive territory the second week of September and RSI surged above 60.
- Offensive Sector Performance: Bullish. Finance remains the big laggard, but tech, consumer discretionary and industrials are leading. 3 out of 4 are in bull mode.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio moved lower the last two weeks, but remains well above its early September low (bullish).
- Small-cap Performance: Bullish. The $RUT:$OEX ratio has been moving higher since mid August with a series of higher highs and higher lows.
- Breadth Charts have been updated (click here)
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
