The indicator summary moved to +4 because of two downgrades. Of note, the AD Volume Lines broke support to turn bearish. Despite these breaks, the NYSE AD Line remains in bull mode and the Net New Highs indicators are still considered bullish. We have yet to see enough selling pressure to tilt the indicator balance to the bears. Today will be a big test as the market digests a second week of less-than-stellar news. Worse-than-expected economic reports weighed on stocks last week. Europe, Cisco and JP Morgan Chase are weighing this week. I am not so much interested in the news, but rather the market's negative reaction to news. In particular, I am watching support levels from the March-April lows. A break would forge lower lows and reverse the uptrends for many of the major index ETFs.
- AD Lines: Neutral. The Nasdaq AD Line never fully recovered after the early April decline and remains weak. The NYSE AD Line backed off its March high, but remains well above key support from the March-April lows.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines formed a head-and-shoulders pattern from February to April and broke support in May.
- Net New Highs: Bullish. Nasdaq Net New Highs turned negative again and the cumulative line moved below its 10-day EMA. However, the cumulative line has yet to break the mid April lows so I am holding off on a bearish stance. NYSE Net New Highs remain positive and the cumulative line hit a new high this week.
- Bullish Percent Indices: Bullish. Eight of the nine sector BPIs remain above 50%, but we have seen significant deterioration in the Technology Bullish% Index ($BPINFO) and the Industrials Bullish% Index ($BPINDY). Both are below 56% and the weakest of the eight that are above 50%.
- VIX/VXN: Bullish. The CBOE Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) are challenging resistance from the February-April highs. A break above these highs would signal a surge in fear and selling pressure could then accelerate.
- Trend-Structure: Bullish. The major index ETFs are testing support from the March-April lows. A break below these lows would reverse the medium-term uptrend, which has been in place since October.
- SPY Momentum: Neutral. 20-day RSI is testing support in the 40-50 zone, but MACD(5,35,5) moved into negative territory and to its lowest level since late November. The Aroon Oscillator dipped to -30 and further weakness below -50 would be bearish.
- Offensive Sector Performance: Bullish. XLI remains the weakest of the offensive sectors. XLY is still holding up and remains the strongest. XLK and XLF hold the balance here. A breakdown by both would turn this indicator group bearish.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio took a hit in April and the Nasdaq has been relatively weak since early April. It is not enough relative weakness to turn bearish on this indicator, but Nasdaq performance should be watched closely.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio peaked in early February, broke below its November low in April and remains in a downtrend. Relative weakness in small-caps is entering its fourth month and remains a concern overall.
- 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 30-December-11
Negative on 16-December-11
Positive on 3-December-11
Negative on 23-November-11
Positive on 28-October-11
Negative on 5-August-11
Neutral on 29-Jul-11
Positive on 30-Jun-11
Negative on 17-Jun-11
Positive on 25-Mar-11
Negative on 18-Mar-11
Positive on 3-Sep-10
Negative on 13-Aug-10
Positive on 6-Aug-10
Negative on 24-Jun-10
Positive on 18-Jun-10
Negative on 11-Jun-10
Positive on 5-March-10
Negative on 5-Feb-10
Positive on 11-Sept-09
