Art's Charts

Downgrades Push Indicator Summary to Zero

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With a slew of downgrades this week, the Indicator Summary now stands at zero, which is a neutral reading. There are several neutral scores this week because many indicator groups are split or on the verge of turning bearish. For example, the Trend and Structure for the Price Charts is neutral because QQQ was the only one that broke its April-May highs. The rest failed, especially IWM and MDY. Despite sharp declines from these failures, the major index ETFs remain above key support levels (June lows). The AD Lines are split because the NYSE AD Line is still in an uptrend, but the Nasdaq AD Line is in a downtrend. The CBOE Volatility Index ($VIX) is neutral because it is on the verge of a breakout that would signal a fear level conducive to more selling.

110729zsumtable


  • AD Lines: Neutral. The Nasdaq AD Line remains in a downtrend overall. The NYSE AD Line took a big hit this month, but remains above the June low, which marks key support. 
  • AD Volume Lines: Bearish. The AD Volume Lines peaked in late April and formed lower highs in July. The 100-day SMAs for the Net Advancing Volume Ratio moved into negative territory. It looks like a downtrend is starting in these key indicators. More details in today's Market Message.
  • Net New Highs: Neutral. The Nasdaq Net New Highs Ratio turned negative (-2%) and the Cumulative Net New Highs line moved below its 10-day EMA. The NYSE Net New Highs Ratio turned slightly negative (1%), but the Cumulative Net New Highs line remains above its 10-day EMA.  
  • Bullish Percent Indices: Bullish. Eight of the nine sector Bullish Percent Indices are above 50%. The industrials BPI is below.
  • VIX/VXN: Neutral. The CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) closed at their highest levels since May. Fear is on the increase and breakouts above 25 would be bearish for stocks.    
  • Trend Structure: Neutral. QQQ was the only ETF to exceed its April-May highs. The rest failed at these highs and moved sharply lower. We have yet to see support breaks though.  
  • SPY Momentum: Neutral. Momentum deteriorated over the past week as RSI moved below 45 and Aroon moved into negative territory. These are not bear levels though. Further weakness below 40 in RSI and -50 in Aroon would be bearish. MACD(5,35,5) remains in positive territory. 
  • Offensive Sector Performance: Neutral. The consumer discretionary and technology sectors show relative strength, but finance and industrials are lagging over the last few months.
  • Nasdaq Performance: Bullish. The $COMPQ:$NYA hit a new 52-week high this month as the Nasdaq led the NY Composite higher over the last several weeks.
  • Small-cap Performance: Bearish. The $RUT:$OEX ratio broke below its June lows as small-caps led the market lower the last three weeks. Mid-caps are also showing relative weakness.  
  • 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.

110729zsumspy

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
Negative on 17-Jun-11
Positive on 30-Jun-11
Neutral on 29-Jul-11

Arthur Hill
About the author: , 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. Learn More
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