The stock market may be overbought and sentiment may seem excessively bullish, but there is simply no sign of weakness on the price charts or with the indicators. The AD Lines and AD Volume Lines both moved to new reaction highs this year. Net New Highs remain firmly positive and the Cumulative Net New Highs lines are above their 10-day moving averages. The technology sector, which was lagging at the end of 2010, has started outperforming in 2011 as money rotates into this key group. There will be a correction one day, but predicting when is a lesson in futility. I will simply follow the price action and the indicators for signs. A correction will start when the price chart and indicators start showing weakness, and not a moment sooner. See the About Page for more details on Art's Charts.
- AD Lines: Bullish. The Nasdaq and NYSE AD Lines remain in firm uptrends with new reaction highs this week.
- AD Volume Lines: Bullish. The Nasdaq and NYSE AD Volume Lines remain in firm uptrends with new reaction highs this week.
- Net New Highs: Bullish. The Nasdaq and NYSE Cumulative Net New Highs lines remain in clear uptrends and above their 10-day EMAs.
- Bullish Percent Indices: Bullish. All Bullish Percent Indices are above 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) are trading at relatively low levels, but remain in clear downtrends. Stocks tend to move higher when volatility is trending lower.
- Trend Structure: Bullish. DIA, QQQQ, IWM, SPY, MDY moved to new 52-week highs this week.
- SPY Momentum: Bullish. MACD(5,35,5) remains in positive territory. RSI bounced off the 40-50 support zone and is back above 50. The Aroon Oscillator moved into negative territory in late November, but rebounded back above +50.
- Offensive Sector Performance: Bullish. Financials have been leading since late November and Technology turned up sharply in 2011. Industrials remain strong overall, but consumer discretionary has started to lag a bit.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio moved to a new high this week.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio took a hit early this week, but remains in an uptrend overall.
- 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. Negative on 5-February. Positive on 5-March. Negative on 11-June. Positive on 18-June. Negative on 24-June. Positive on August 6. Negative on August 13. Positive on September 3.
