The bulk of the evidence remains bullish, but there are signs of dissent brewing out there. The bulls control the trends as the major index ETFs hit new highs in April. The AD Volume Lines are also strong and the Net New Highs Lines have yet to break down. Relative weakness in the offensive sectors remains a concern though. Consumer staples and healthcare are the leaders right now. The Nasdaq AD Line is also lagging with lower highs. Bonds appear to have not fear right now. With stocks and bonds inversely correlated, continued strength in bonds would be negative for stocks. Despite these concerns, more signs of technical weakness are needed before these concerns translate into a bearish bias. I am also concerned with seasonality and sentiment. While these are not good for timing, they would enhance any bearish signals in the future. Bullish sentiment readings are back near extremes over the last few weeks and the six-month cycle turned bearish in May. Read more about this summary in the About Page.
AD Lines: Neutral. The Nasdaq hit a new high on Monday, but the Nasdaq AD Line is lagging with lower highs since February 17th. The NYSE AD Line hit a new high on Friday and is keeping pace with the index.
AD Volume Lines: Neutral. The Nasdaq AD Volume Line has yet to confirm the new high in the Nasdaq and shows some mild relative weakness. The NYSE AD Volume Line did exceed its February high to confirm the higher high in the NY Composite.
Net New Highs: Bullish. Nasdaq Net New Highs dipped to zero this week, but the Cumulative Net New Highs Line has yet to turn down and remains above its 10-day EMA. NYSE Net New Highs also dipped, but held in positive territory and the Cumulative Line remains in an uptrend.
Bullish Percent Indices: Bullish. All BPIs remain above 50%. The Nasdaq (64%) and the Technology Sector (61%) are the lowest.
VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) bounced sharply this week, but remain at relatively low levels overall. Real trouble starts with moves above 25.
Trend Structure: Bullish. The major index ETFs (DIA, IWM, MDY, QQQ, SPY) recorded 52-week highs in April and are in uptrends overall.
SPY Momentum: Bullish. Momentum on the April advance was not as strong as in February, but the indicators have yet to break down. Watch the 40-50 zone for RSI, the zero line for MACD(5,35,5) and -50 for Aroon (20). Moves below these levels would be momentum bearish.
Offensive Sector Performance: Bullish. The defensive sectors (staples, healthcare, utilities) are outperforming the offensive sectors (consumer discretionary, finance, technology, industrials). However, XLI and XLY hit new highs in April and XLK came to life since mid March. These three are clear uptrends and have yet to breakdown. XLF remains the big drag.
Nasdaq Performance: Bullish. The Nasdaq has been outperforming the NY Composite since mid March. It is not for a long time, but the $COMPQ:$NYA ratio broke a trendline extending down from January and exceeded its March highs. Techs are starting to show relative strength.
Small-cap Performance: Bullish. Small-caps have been outperforming since August and underperforming since early April. This is not enough relative weakness to be concerned just yet.
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-09
Negative on 5-Feb-10
Positive on 5-March-10
Negative on 11-Jun-10
Positive on 18-Jun-10
Negative on 24-Jun-10
Positive on 6-Aug-10
Negative on 13-Aug-10
Positive on 3-Sep-10
Negative on 18-Mar-11
Positive on 25-Mar-11
