Unless things reverse, the New York Stock Exchange Advance Decline line (NYAD) has given a sell signal, as it has fallen below its 50-day moving average and below the 50 area on its RSI simultaneously. That is a Duarte 50-50 sell signal.
As a result, until this technical development is remedied, the odds of a lasting rally in stocks will be limited and caution is warranted. Nevertheless, it should be noted that this group of indicators could reverse rapidly; they certainly have done so repeatedly over the last few months. Still, the intensity and speed with which this particular signal has developed should be taken seriously.
The S&P 500 (SPX) and the Nasdaq 100 (NDX) are also showing weakness, with both indexes testing key short-term support.
The next few days are likely to be crucial. Stay tuned.
Joe Duarte
In The Money Options
Joe Duarte is a former money manager, an active trader and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best selling Trading Options for Dummies, rated a TOP Options Book for 2018 by Benzinga.com and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.
The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.
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