The indicator summary has been switching from positive to negative since May. This coincides with a trading range in the S&P 500 since May. This week the Bullish Percent Indices and Volatility Indices flipped into bull mode. While the majority of indicators are bullish overall, many remain vulnerable to another flip should the market turn sharply lower. For example, the S&P 500 and Nasdaq 100 Bullish Percent Indices are at 52%. It would not take much to push these back below 50%. All three momentum indicators for the S&P 500 are also in bull mode, but MACD and Aroon are barely in positive territory. Again, it would not take much to flip them back into negative territory.
- AD Lines: Neutral. The NYSE AD Line hit a new 52-week high this week (bullish), but the Nasdaq AD Line has yet to reverse its downtrend (bearish).
- AD Volume Lines: Bullish. The NYSE AD Volume Line formed a higher high in early August and a higher low in late August (bullish). The Nasdaq AD Volume Line is tracing out a triangle since June (neutral).
- Net New Highs: Bullish. Nasdaq Net New Highs turned positive last week week, 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 and Nasdaq 100 are above 50%. Five of the nine sector BPIs are above 50%. The BPIs for the consumer discretionary and industrials sectors really surged this week.
- 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 this week. IWM tested its July low and broke above channel resistance.
- SPY Momentum: Bearish. MACD(5,35,5) and Aroon (20) remain in negative territory, but RSI surged above 50.
- Offensive Sector Performance: Neutral. Consumer discretionary and industrials are showing some relative strength, but technology and finance show relative weakness overall.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio moved to a new reaction low in early September.
- 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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