With this week's big move, the indicator summary flipped from negative to positive. There are clearly some judgment calls at work here. It really boils down to accepting this week's surge as the real deal. The alternative is that it was just one heck of a dead-cat bounce. Basically, the move was strong enough to negate the support breaks seen in late November. Moreover, the November decline retraced 50-61.80% of the October advance for most major index ETFs. This means a higher low formed in late November. Possible higher lows followed breakouts in the AD Volume Lines as well. I am also impressed with the Bullish Percent Indices, of which seven of nine are above 50%. With volatility high and the market in news driven mode, things could change back in a week or two. For now, I think the bulk of the evidence favors the bulls as long as Wednesday's gaps holds.
- AD Lines: Bearish. The Nasdaq AD Line bounced off the October low, but remains well below its October high and in a downtrend overall. The NYSE AD Line surged in October and broke resistance. The decline in late November was deep, but could still be a throwback or post-breakout correction. I will give this indicator a bullish bias as long as the late November low holds.
- AD Volume Lines: Bullish. The NYSE and Nasdaq AD Volume Lines surged in October and broke resistance. The decline in late November was deep, but could still be a throwback or post-breakout correction. I will give these indicators a bullish bias as long as the late November low holds.
- Net New Highs: Neutral. Nasdaq Net New Highs remain negative and the Cumulative Net New Highs Lines is below its 10-day EMA. NYSE Net New Highs turned positive and the Cumulative Net New Highs Line has been moving higher since mid October. This indicator could hold the key for the bulls, and the bears.
- Bullish Percent Indices: Bullish. Seven of the nine BPIs are above 50%. The Consumer Discretionary Bullish% Index ($BPDISC) and Technology Bullish% Index ($BPINFO) are above 60%, which is quite positive. The Finance Bullish% ($BPFINA) moved back above 50% this week. The majority of stocks in the majority of sectors are on P&F buy signals (Double Top Breakouts).
- VIX/VXN: Bullish. The CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) both broke below 30 and remain in downtrends overall.
- Trend Structure: Bullish. DIA, MDY, IWM, QQQ and SPY all surged back above their broken support levels. At this point, I must consider it a failed support break or bear trap. The steepness of this week's rally reflects lopsided buying pressure that could see follow through in the coming weeks. I am watching Wednesday's gaps for the first sign of trouble.
- SPY Momentum: Bearish. RSI surged above 50, but has yet to break 60 for a bullish momentum signal. MACD(5,35,5) moved into positive territory. The Aroon Oscillator (20) remains in bear mode (below -50).
- Offensive Sector Performance: Bullish. The Finance SPDR (XLF), Industrials SPDR (XLI), Technology SPDR (XLK) and Consumer Discretionary SPDR (XLY) surged over 7% and move back above broken support levels. These are powerful moves. There were big gaps on Wednesday and these are bullish as long as they hold.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio peaked in late September and moved lower the last 3 months. The Nasdaq is underperforming the NY Composite ($NYA).
- Small-cap Performance: Neutral. The $RUT:$OEX ratio surged in October as small-caps led the market higher, but stalled near August highs and declined in November. There is big resistance from the August-November highs.
- 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
Positive on 3-December-11
