With a couple more indicator turns, the indicator summary is now within a point of its maximum reading, which is +10. This often happens after an extended advance and the S&P 500 ($SPX) is up significantly in September. Lagging Nasdaq breadth has been countered by relative strength in large-cap technology stocks (Nasdaq 100), which went on a tear the last five days. Even though the indicator summary is near its max, a number of indicators simply show modest strength. NYSE Net New Highs are hovering around +200, the NYSE and Nasdaq AD Volume Lines have yet to break their summer highs and the Bullish Percent Indices are still somewhat mixed. Nevertheless, the bullish evidence still outweighs the bearish evidence.
- AD Lines: Neutral. The NYSE AD Line hit a new 52-week high again this week (bullish), but the Nasdaq AD Line remains below its August high (bearish).
- AD Volume Lines: Bullish. The NYSE AD Volume Line formed a higher high in early August and is currently challenging its summer highs (bullish). The Nasdaq AD Volume Line is challenging its summer highs, but has yet to break out (neutral).
- Net New Highs: Bullish. Nasdaq Net New Highs turned positive two weeks ago, but the cumulative Net New Highs line has been trending lower since mid May (neutral). NYSE Net New Highs exceeded 200 on Thursday and the cumulative Net New Highs line continues to rise (bullish).
- Bullish Percent Indices: Bullish. The BPIs for the S&P 500, NYSE and Nasdaq 100 are above 50%. Six of the nine sector BPIs are above 50%. The BPIs for healthcare, finance and technology remain below 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and Nasdaq 100 Volatility Index ($VXN) have been trending lower since late May. Falling volatility means lower risk.
- Trend Structure: Bullish. QQQQ, SPY and DIA formed higher lows and broke above channel resistance with big moves in early September week. IWM tested its July low and broke above channel resistance.
- SPY Momentum: Bullish. MACD(5,35,5) and Aroon (20) moved into positive territory and surged above 60.
- Offensive Sector Performance: Bullish. Finance has been leading since late August and technology surged over the last five days.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio broke above its late August highs and techs are starting to outperform.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio has been trending lower since April, but a small bullish divergence formed in August and the price relative surged the last two weeks.
- 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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