Despite a decline this week, the indicator summary remains unchanged and net positive. Even so, there are some glaring signs of weakness within the market. The AD Volume Lines failed at broken support and remain bearish overall. The Bullish Percent Indices for the technology and industrials sectors are below 50%. These two sectors are also showing relative weakness. Rising wedges have taken shape on many price charts (SPY, DIA, QQQ) and lower peaks could be forming with the early July highs. These negative undercurrents detract from the positives within the market. At best, it looks like we could see choppy trading until the balance of power definitively tilts in one direction or the other.
- AD Lines: Neutral. The Nasdaq AD Line is in a medium-term downtrend since March, but a short-term uptrend since early June. The NYSE AD Line surged to a new high and then fell back over the past week.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines broke down in May, returned to their support breaks in early July and then turned sharply lower the last five days. The May breakdowns and support breaks have held.
- Net New Highs: Bullish. NYSE Net New Highs remain strong as the cumulative line hit a new high this month. Nasdaq Net New Highs turned negative this week and the cumulative line remains well below its May peak. It remains above its 10-day EMA and bullish until a break below this level, which would take another week or two of selling pressure.
- Bullish Percent Indices: Bullish. Six of the nine sector BPIs remain above 50%. However, note that the Technology Bullish% Index ($BPINFO) and the Industrials Bullish% Index ($BPINDY) are below 50%. The bulls are not going far with relative weakness in these two.
- VIX/VXN: Bullish. The Nasdaq 100 Volatility Index ($VXN) surged above 20% this week, but has yet to break its late June high (23). The CBOE Volatility Index ($VIX) remains subdued with resistance in the 21.5 area.
- Trend-Structure: Neutral. The major index ETFs broke down in May, surged in June and then moved sharply lower the last five days. Many price charts show peaks below the April-May peaks and rising wedge patterns over the last six weeks. These are bearish setups and a break below the late June low could signal a continuation lower.
- SPY Momentum: Bullish. MACD(5,35,5) and Aroon remain in positive territory. RSI broke above 60 last week, but could not hold it and moved back below 50. Two of the three are bullish overall.
- Offensive Sector Performance: Bearish. The finance sector has been outperforming since early June, but the other three offensive sectors are lagging the S&P 500. Relative weakness in the technology and industrials sectors continues to hamper the bulls.
- Nasdaq Performance: Bullish. Despite relative weakness in techs the last few weeks, the $COMPQ:$NYA ratio remains above its June lows and has yet to break down.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio pulled back after its big surge, but most of the gains are holding as small-caps take the lead.
- 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 6-July-12
Negative on 18-May-12
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
