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.
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.
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