With three downgrades, the indicator summary turned negative for the first time since June. The summary was zero (neutral) the last two weeks. The sharp decline over the last two days was enough to tilt the balance towards the bears. Of note, the NYSE AD Volume Line broke support, the Nasdaq AD Line broke its June trend line and the eight week decline accelerated this week. Perhaps this is a washout of sorts to pave the way for a reversal. I would like to see channel breakouts in IWM and QQQ before taking any strength seriously though.
- AD Lines: Bearish. The Nasdaq AD Line broke below channel support to reverse the 5-month uptrend. The NYSE AD Line has been flat since mid September and is now testing support from the late September low.
- AD Volume Lines: Bearish. The Nasdaq AD Volume Line formed a large bearish divergence with the September peak and broke support in mid October. The NYSE AD Volume Line peaked in mid September and broke the June trend line with this week's decline.
- Net New Highs: Neutral. Nasdaq Net New Highs dipped to their lowest level since July and the cumulative line broke the 10-day EMA again. NYSE Net New Highs remain positive and the cumulative line has yet to break its 10-day EMA.
- Bullish Percent Indices: Bullish. Eight of the nine sector BPIs are above 50%. The Technology Bullish% Index ($BPINFO) is the first to fall below 50% (49.37%)
- VIX/VXN: Neutral. The Nasdaq 100 Volatility Index ($VXN) broke its early September high and closed above 20 on Thursday. The S&P 500 Volatility Index ($VIX), however, hit resistance at this high and has yet to break 20.
- Trend-Structure: Bearish. DIA, IWM, MDY, QQQ and SPY recorded 52-week highs in September and then moved into corrective mode. The current downtrends are eight week's old and accelerating. This acceleration is negative and the November highs now mark first resistance.
- SPY Momentum: Bearish. RSI broke below 40 in late October. MACD(5,35,5) turned negative and moved to its lowest level since mid June. Aroon turned bearish with a move below -50.
- Offensive Sector Performance: Neutral. XLK remains by far the weakest sector. XLY, XLI and XLF got hit hard the last two days, but have yet to break support.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio peaked in early September and broke down in October. The Nasdaq shows some serious relative weakness.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio has been trending lower since February. The decline slowed the last two months, but did not reverse.
- 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:
Negative on 9-November-12
Neutral on 26-October-12
Positive on 6-July-12
Negative on 18-May-12
Positive on 30-December-11
Negative on 16-December-11
Positive on 3-December-11
Negative on 23-November-11
Positive on 28-October-11
Negative on 5-August-11
Neutral on 29-Jul-11
Positive on 30-Jun-11
Negative on 17-Jun-11
Positive on 25-Mar-11
Negative on 18-Mar-11
Positive on 3-Sep-10
Negative on 13-Aug-10
Positive on 6-Aug-10
Negative on 24-Jun-10
Positive on 18-Jun-10
Negative on 11-Jun-10
Positive on 5-March-10
Negative on 5-Feb-10
Positive on 11-Sept-09
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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