There is no change in the indicator summary as the bulk of the evidence remains bullish. We saw new highs in SPY, RSP and MDY this week. The NYSE AD Volume Line also hit a new high. Net New Highs surged as buying pressure picked up in November. Volatility remains low as the VIX and VXN sank towards their 2013 lows. Some analysts may view this as complacency, but low volatility means low risk and this creates a positive backdrop for stocks. Also note that the stock market basically survived the most bearish two months of the year (Sept-Oct) and the bullish six month cycle started in November.
- AD Lines: Bullish. The Nasdaq AD Line remains in an uptrend with higher highs and higher lows. The NYSE AD Line broke above its May-July-September highs in October and is holding this breakout.
- AD Volume Lines: Bullish. The Nasdaq AD Volume Line surged toward its October high this week and remains in an uptrend. The NYSE AD Volume Line surged to a new high this week.
- Net New Highs: Bullish. NYSE Net New Highs surged back above +10% this week and remain firmly positive. Nasdaq Net New Highs surged above +5%.
- Bullish Percent Indices: Bullish. All nine sector Bullish Percent Indices are above 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) fell back to the low end of their 2013 range and volatility remains low, which is bullish for the market.
- Trend-Structure: Bullish. DIA, MDY, QQQ, RSP and SPY hit new highs this week. IWM is the only laggard and has yet to confirm. Nevertheless, the bulk of the evidence is bullish with five of six hitting new highs.
- SPY Momentum: Bullish. RSI bounced off the 40-50 zone and MACD (5,35,5) turned up near the zero line in early October. The Aroon Oscillator turned up and moved above +50 in late October.
- Offensive Sector Performance: Bullish. XLY, XLK and XLI hit new highs again this week. XLF has yet to clear its prior high, but the flag breakout is holding and the ETF is close to a new high.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio stalled the last six weeks, but has yet to actually break down and reverse the uptrend that started in April.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio formed a lower high in mid October and broke support with a sharp decline. Small-caps are underperforming and this is negative.
- Breadth charts (here) and intermarket 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.
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.
