With further strength this week, it is little surprise that the indicator summary remains unchanged at +10. Even though there are no signs of weakness, there are plenty of overbought signs. Eight of the nine sector Bullish Percent Indices are above 80%. The current advance in the major index ETFs is in its eighth week and stocks are up sharply since December 19th. The move is even more impressive when measured from the late November or early October lows. At this point, the market is in a holding pattern. The major index ETFs are too strong to consider turning bearish, but overbought conditions and excessively bullish sentiment increase the odds of a correction.
- AD Lines: Bullish. The Nasdaq AD Line broke the October high and the NYSE AD Line forged a 52-week high this week.
- AD Volume Lines: Bullish. The Nasdaq AD Volume Line and the NYSE AD Volume Line broke their December and October highs with strong moves this year.
- Net New Highs: Bullish. Nasdaq Net New Highs have been mostly positive in 2012 and the Cumulative Net New Highs Line moved above its 10-day EMA the second week of January. NYSE Net New Highs have been largely positive since late November and the Cumulative Net New Highs Line is in a strong uptrend.
- Bullish Percent Indices: Bullish. All nine Bullish Percent Indices are above 50%. Eight of nine are above 80%. This is both overbought and strong.
- VIX/VXN: Bullish. The CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) have been trending lower since early October. Decreasing volatility is positive for the stock market.
- Trend-Structure: Bullish. For the current advance, which began in early October, DIA, IWM, MDY, QQQ and SPY all recorded new highs for the move this month.
- SPY Momentum: Bullish. RSI is in its bull range (40-80), the Aroon Oscillator surged back above +50 and MACD(5,35,5) is in positive territory.
- Offensive Sector Performance: Bullish. The Consumer Discretionary SPDR (XLY) and Technology SPDR (XLK) recorded new 52-week highs this week. The Finance SPDR (XLF) broke its October high and the Industrials SPDR (XLI) is closing in on its 2011 highs. In short, the offensive sectors are leading the market.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio broke above its mid December high and techs have been outperforming in 2012.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio broke above is December highs as small-caps came to life in 2012.
- 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
Negative on 16-December-11
Positive on 30-December-11
