It remains a tricky period for the stock market. Overall, the market summary table comes in at -2, which is slightly bearish. There are, however, a few indicators that could go either way. The McClellan Oscillators both surged above +50 in mid February, but only for a day and I elected to keep this indicator bearish. Trend & Structure are deemed neutral because some indices broke their late November lows (SPY,DIA) and some held (IWM,QQQQ). Market (SPY) momentum is still deemed bearish, but the three momentum oscillators have recovered nicely with the February bounce. These three are at their make-or-break levels. In fact, I would say that the stock market bounce is at its make-or-break level. Further strength would suggest a bullish renewal. A decline from current levels would reinforce the bearish argument. Indicator details can be found after the jump.
- Breadth Charts have been updated (click here)
- AD Lines: Neutral. The Nasdaq AD Line remains in a downtrend since October with lower lows and lower highs. The NYSE AD Line remains in an uptrend overall and is near its January high.
- AD Volume Lines: Bullish. Both AD Volume Lines remain in uptrends overall. The Nasdaq AD Line is near its January high, but the NYSE AD Volume Line only retraced 50% of the January-February decline.
- Net New Highs: Bullish. Nasdaq and NYSE Net New Highs are positive, but the February peaks were half the levels seen in early January. Fewer stocks are making new highs.
- McClellan Oscillators: Bearish. The Nasdaq and NYSE McClellan Oscillators remain a tough call. Both surged above +50 in mid February, but only for a brief moment. In contrast, there were multiple moves below -50 in late January and early February. I am staying bearish here.
- Bullish Percent Indices: Bullish. Although a lagging/coincident indicator, all major index BPI's are above 50%. All sector BPI's are also above 50%. The Finance sector Bullish Percent Index is the weakest at +52%.
- Fear Index: Bearish. After breaking their late November highs, the VIX and VXN pulled back sharply as the market bounced the last two weeks. The moment-of-truth is (still) near as both trade above their January lows.
- Trend Structure: Neutral. SPY and DIA broke their late November lows, but QQQQ, IWM and RSP held corresponding lows and their 62% retracements.
- SPY Momentum: Bearish. The Aroon Oscillator, MACD (5,35,5) and 14-day RSI all bounced the last few weeks. Aroon is trading right at +50, RSI is trading in the 50-60 zone and MACD is just above zero. This is the moment-of-truth. Further strength would turn these bullish again.
- Offensive Sector Performance: Bearish. The Financials SPDR (XLF) and Technology SPDR (XLK) continue showing relative weakness, but the Consumer Discretionary SPDR (XLY) shows relative strength by challenging its January high.
- Nasdaq Performance: Bullish. The Nasdaq led the NY Composite over the last two weeks.
- Small-caps Performance: Bullish. Small-caps led large-caps over the last three weeks.
- Intermarket: Bearish. Dollar is rising as investors turn risk averse.
