Monday's sharp decline was enough to trigger a slew of downgrades in the indicator summary. I noted on Friday that the indicator was already looking vulnerable and it would not take much to tilt the balance back to the bears. Monday's big decline marked the fifth straight down day for SPY. Widespread weakness produced support breaks in the AD Volume Lines, major index ETFs and key sectors ETFs. This means the October breakouts did not hold. The only surprises came from the volatility indices, which did not break resistance. Perhaps there will be a delayed reaction because the bulk of the evidence is now bearish. Today's update is coming early because I will be off on Friday. Happy Thanksgiving!
- AD Lines: Bearish. The Nasdaq AD Line never broke resistance from the mid August high and fell sharply the last six days to remain bearish. The NYSE AD Line fell short of its summer highs and moved sharply lower the last six days. A lower high formed and the indicator broke below its early November low to turn bearish again.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines both plunged and broke below their early November lows. This means the October breakouts did not hold and these indicators are in bear mode.
- Net New Highs: Neutral. Net New Highs turned negative on the Nasdaq in November and this pushed the Cumulative Net New Highs Line below its 10-day EMA. NYSE Net New Highs turned negative the last few days, but the Cumulative Net New Highs line remains above its 10-day EMA (by just 1 net new high!). It will not take much to push this indicator bearish as well.
- Bullish Percent Indices: Neutral. Four of the nine sector BPIs are below 50% and four are above 50%. The Industrials Bullish% Index ($BPINDY) is at 50%. Technically, the indicator is neutral, but it would not take much to push it either way.
- VIX/VXN: Bullish. I am quite surprised that the CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) did not break above their late October highs in the 37-38 area. Fear did not spike and these indicators have yet to turn bearish.
- Trend Structure: Bullish. DIA, MDY, IWM, QQQ and SPY broke below their early November lows. The October breakouts failed to hold and this is negative. Also note that these ETFs fell short of their summer highs, which means lower highs formed in October.
- SPY Momentum: Bearish. RSI is below 50, but above 40 to remain bullish. However, MACD(5,35,5) moved into negative territory and Aroon (20) plunged below -50 to turn bearish.
- Offensive Sector Performance: Bearish. The Finance SPDR (XLF) and the Technology SPDR (XLK) have been leading lower the last few weeks and showing relative weakness. The Consumer Discretionary SPDR (XLY) broke support and failed to hold its breakout. Even though the Industrials SPDR (XLI) is holding up reasonably well, it is not enough to keep this indicator group from going bearish.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio peaked in late September and moved lower the last 2-3 months. The Nasdaq is underperforming the NY Composite ($NYA).
- Small-cap Performance: Bullish. The $RUT:$OEX ratio surged back to its late August highs as small-caps led the market higher in October. I will turn bearish on this indicator if the ratio breaks below 1.30, which could happen soon.
- 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
Negative on 23-November-11
