There is no change in the indicator summary as stocks extended their gains again this week. The AD Lines and AD Volume Lines hit new highs. Net New Highs remain firmly positive. Momentum is bullish, if not short-term overbought. However, as we have seen since mid November, the term overbought does not mean much and tends to be over used. Techs are starting to outperform again and the consumer discretionary sector remains the strongest sector in the market.
- AD Lines: Bullish. The Nasdaq and NYSE AD Lines hit new highs again this week and the April lows mark key support.
- AD Volume Lines: Bullish. The Nasdaq and NYSE AD Volume Lines both moved to new highs this week and the April lows mark key support.
- Net New Highs: Bullish. Nasdaq and NYSE Net New Highs remain firmly positive and their cumulative lines moved to new highs.
- Bullish Percent Indices: Bullish. All nine BPIs are above 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) are trading near their lows and well below resistance at 20%.
- Trend-Structure: Bullish. DIA, IWM, MDY, QQQ and SPY hit 52-week highs over the past week.
- SPY Momentum: Bullish. RSI bounced off the 40-50 zone for the third time since December and moved above 70. MACD(5,35,5) has been positive since late November. The Aroon Oscillator is back at +50.
- Offensive Sector Performance: Bullish. XLF, XLI, XLK and XLY hit 52-week highs again this past week.
- Nasdaq Performance: Bullish. For the first time in a long time, the $COMPQ:$NYC ratio is bullish as it broke above its January high this month.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio surged and broke above its late April high the last two weeks. I will count this surge and breakout as bullish as long as it holds.
- Breadth Charts (here) and Intermarket Charts (here) have been updated.
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
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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