Indicator Summary Improves, But Remains Bearish Overall
Stocks made a valiant run in June, but it was cut short with Thursday’s sharp decline. Even though a few indicator groups were upgraded, the bulk of the evidence remains bearish. Strength within the NYSE, pushed the NYSE AD Line sharply higher and NYSE Net New Highs into positive territory the last few weeks. However, the NYSE and Nasdaq AD Volume Lines remain below their support breaks and clearly bearish. The Bullish Percent Indices turned bullish as six of nine moved above 50%. We can expect some upgrades after a strong counter-trend rally. More importantly, the June highs now mark key levels to watch going forward. You can read more about this indicator summary on the about page.
- AD Lines: Neutral. The Nasdaq AD Line broke to a new 52-week low in early June and remains in a downtrend overall. The NYSE AD Line surged above its support break with a strong move, but remains below the March-April highs and a lower high could be forming after Thursday’s sharp decline.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines surged above their late May highs, but remain below support breaks from the March-April lows. The medium-term trend remains down and could be set to continue after Thursday’s sharp decline.
- Net New Highs: Neutral. Nasdaq Net New Highs turned positive and the cumulative line moved above its 10-day EMA, but I am treating this as an oversold bounce within a bigger downtrend for now. NYSE Net New Highs have been positive most of the month and the cumulative line is rising again. I am watching support from the early June low for signs of a breakdown.
- Bullish Percent Indices: Bullish. Six of the nine BPIs are above 50%. I suspect this is because many stocks broke above their late May highs, which produced Double Top Breakouts on the P&F charts. The Consumer Discretionary Bullish% Index ($BPDISC) is the one to watch here and is currently at 54.43%.
- VIX/VXN: Bearish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) declined sharply in June and moved below 20%, which is bullish. However, both surged on Thursday and closed above 20%. The June lows hold the key now.
- Trend-Structure: Bearish. DIA, IWM, MDY, QQQ and SPY rallied in June and ultimately failed at their support breaks with Thursday’s decline. These June highs now hold the key.
- SPY Momentum: Bearish. RSI hit resistance at 60, which is consistent with a downtrend. MACD(5,35,5) moved into positive territory, but did not exceed the early May high so I will stay bearish. The Aroon Oscillator, however, surged above +50 to turn bullish. Two of the three are still bearish.
- Offensive Sector Performance: Bearish. XLF, XLK, XLY and XLI remain below their late May highs, while XLP, XLU and XLV are above these highs. XLP and XLU hit new 52-week highs recently and remain the two strongest sectors overall.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA has been flat since late March, but is holding its gains and remains above support from the April low. The Nasdaq is still stronger than the NY Composite ($NYA) overall.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio peaked in early February and declined to its lowest level since October. The trend is down and relative weakness in small-caps is bearish for the market overall.
- 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:
Negative on 18-May-11
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