The indicator summary reflects the split nature of the stock market. The finance sector is strong, but the technology sector is weak, very weak. The consumer discretionary and industrials sectors are holding the line though. Much of the weakness stems from the Nasdaq and technology sector. The Nasdaq AD Volume Line broke down in early October and Nasdaq Net New Highs turned negative the last six days. The technology sector is by far the weakest of the four offensive sectors and the Nasdaq is seriously lagging the NY Composite. Will the tech sector drag the rest of the market lower? Watch XLI and XLY for clues.
- AD Lines: Bullish. The Nasdaq AD Line fell sharply and is now testing the channel trend line extending up from the early June low. The NYSE AD Line hit a new high last week and is currently consolidating within an uptrend.
- AD Volume Lines: Neutral. The Nasdaq AD Volume Line formed a large bearish divergence with the September peak and broke support this month. The NYSE AD Volume Line hit resistance from its spring high in mid September and fell back the last five weeks, but remains in an uptrend since early June.
- Net New Highs: Neutral. Nasdaq Net New Highs turned negative and the cumulative line moved below its 10-day EMA. NYSE Net New Highs remain positive though and the cumulative line has yet to break its 10-day EMA.
- Bullish Percent Indices: Bullish. All nine sector BPIs remain above 50%. The Technology Bullish% Index ($BPINFO) remains the "least strong" with a 54.43% reading.
- VIX/VXN: Neutral. The Nasdaq 100 Volatility Index ($VXN) broke above its early September high to start an uptrend. The S&P 500 Volatility Index ($VIX) surged, but hit resistance from its early September high and has yet to break out.
- Trend-Structure: Bullish. DIA, IWM, MDY, QQQ and SPY recorded 52-week highs in September and then moved into corrective mode. IWM and QQQ are in five week downtrends. SPY and DIA broke their September lows, but are still less than 5% below their September peaks.
- SPY Momentum: Bearish. RSI broke below 40 for the first time since early June. MACD(5,35,5) turned negative and moved to its lowest level since mid June. Aroon turned bearish with a move below -50 on October 12.
- Offensive Sector Performance: Neutral. Relative weakness in XLK is offset by relative strength in XLF. XLI and XLY are still performing in line.
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio peaked in early September and broke down in October. The Nasdaq shows some serious relative weakness.
- Small-cap Performance: Bearish. The $RUT:$OEX peaked in early February and hit a new low in early August. Even though the trend is down, this ratio may be forming a higher low in October. We have, however, yet to see a strong upturn or breakout.
- 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:
Neutral on 26-October-12
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
Neutral on 26-October-12
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
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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