As noted last week, another strong move in the stock market would likely turn the indicator summary positive. That is indeed what we got, especially with Thursday's surge. The NYSE AD Line and Nasdaq AD Volume Line surged through resistance levels. New 52-week highs expanded as the cumulative new highs lines moved above the 10-day EMAs. Perhaps most importantly, the major index ETFs broke above resistance levels marked by the late August and/or mid September peaks. Even though this move turns the indicator summary positive, keep in mind that stocks are overbought after a big October run. SPY is up over 15% and IWM is up around 20% from their early October lows.
- AD Lines: Neutral. The Nasdaq AD Line surged to resistance, but did not break its mid August high. No cigar just yet. The NYSE AD Line broke through resistance and is clearly in bull mode.
- AD Volume Lines: Bullish. There is no ambivalence here as both the NYSE and Nasdaq AD Volume Line broke resistance with massive surges the last few weeks.
- Net New Highs: Bullish. New lows dried up with the October low and new highs expanded with this weeks surge. Net New Highs turned positive and the Cumulative Net New Highs lines moved above their 10-day EMAs.
- Bullish Percent Indices: Bullish. All nine sector BPIs are above 50% and in bull mode.
- VIX/VXN: Bullish. The CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) both plunged below support and below 30 this week. Volatility and fear broke down and this is positive for stocks.
- Trend Structure: Bullish. DIA, IWM, MDY, QQQ and SPY all broke above resistance levels with big moves in October. These resistance breakouts are bullish until proven otherwise (challenged).
- SPY Momentum: Bullish. The momentum indicators are all in bull mode. RSI is rising and above 60. MACD(5,35,5) is in positive territory. Aroon moved above 50.
- Offensive Sector Performance: Bullish. The Consumer Discretionary SPDR (XLY) has been leading the market for several weeks now. Even though the Technology SPDR (XLK) has slowed is lagging recently, the Finance SPDR (XLF) and the Industrials SPDR (XLI) picked up the slack this week.
- Nasdaq Performance: Neutral. The $COMPQ:$NYA ratio formed a lower high in October and broke support with a decline the last two weeks. The Nasdaq is underperforming the NY Composite ($NYA). Techs are weighing on the Nasdaq, while finance is bolstering the NY Composite.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio surged in early October, stalled for two weeks and then surged again the last six days. Even though the August peak has yet to be broken, this surge shows relative strength in small-caps and I will consider the indicator bullish.
- 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
Negative on 17-Jun-11
Positive on 30-Jun-11
Neutral on 29-Jul-11
Negative on 5-August-11
Positive on 28-October-11
