It's a choppy time for the indicator summary as the total flipped from -2 to +2 this week as the AD Volume Lines and Sector Performance were upgraded. The AD Volume Lines broke their March lows two weeks ago, but recovered with a strong breadth surge this week. I am calling these breaks bear traps and upgrading the indicators to bullish. A move below the June lows would put them back in the bearish camp.
Sector-wise, I continue to be impressed with relative strength in the consumer discretionary sector, which is the most economically sensitive sector. The finance sector also came to life this week and the industrials sector looks strong over the last three weeks. Everything now hinges on the June lows and recent breakouts, especially with the finance sector. Watch Wednesday's gap in XLF for early clues.
The results on in – and unanimous. Feedback was clearly in favor of keeping the numeric total for the indicator summary. With the current reading at +2, it is vulnerable to another quick reversal if this early summary rally fails. Over the next two weeks, I would focus on the AD Volume Lines and the offensive sectors for clues. I am starting a two week vacation on Friday. The next update will be Monday, July 18th.
- AD Lines: Neutral. The Nasdaq AD Line surged over the last two weeks, but remains in a downtrend overall. The NYSE AD Line held above its April low and surged to remain in an uptrend overall.
- AD Volume Lines: Bullish. The AD Volume Lines briefly broke their March lows, but moved right back above with a positive breadth surge the last two weeks. The 50-day EMAs of Net Advancing Volume Ratio also turned positive. At this point, I am inclined to call the support test successful and put these indicators back in the bullish column.
- Net New Highs: Neutral. The 10-day EMA of Nasdaq Net New Highs is at zero and the Cumulative Net New Highs Line is poised to move back above the 10-day EMA. The NYSE Cumulative Net New Highs Line held its 10-day EMA throughout June and remains bullish.
- Bullish Percent Indices: Bullish. Two of the nine sector BPIs are below 50% (energy and info tech). Seven of nine is enough to stay clearly bullish.
- VIX/VXN: Bullish. The CBOE Volatility Index ($VIX) and Nasdaq 100 Volatility Index ($VXN) did not close above 25 this month and both moved below 20 this week. Fear is not high enough to trigger a serious increase in selling pressure.
- Trend Structure: Bullish. QQQ, SPY, MDY and IWM successfully tested their March lows while DIA held above its March low.
- SPY Momentum: Bearish. RSI surged above 50, but MACD(5,35,5) remains in negative territory and Aroon remains below -50.
- Offensive Sector Performance: Bullish. The consumer discretionary sector remains the strongest and continues to show upside leadership. Techs, Industrials and Finance all moved above their mid June highs this week.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio surged over the last two weeks, but remains flat for the year (2011).
- Small-cap Performance: Bearish. The $RUT:$OEX ratio surged the last two weeks as small-caps outperformed, but this Price Relative has yet to break resistance from the May highs.
- Breadth Charts (here) and Inter-market charts (here) have been updated.
This table is designed to offer an objective look at current market conditions. It does not aim to pick tops or bottoms. Instead, it seeks to identify noticeable shifts in buying and selling pressure. With 10 indicator groups, the medium-term evidence is unlikely to change drastically overnight.
Previous turns include:
Positive on 11-Sept-09
Negative on 5-Feb-10
Positive on 5-March-10
Negative on 11-Jun-10
Positive on 18-Jun-10
Negative on 24-Jun-10
Positive on 6-Aug-10
Negative on 13-Aug-10
Positive on 3-Sep-10
Negative on 18-Mar-11
Positive on 25-Mar-11
Negative on 17-Jun-11
Positive on 30-Jun-11
