Oversold Bounce Not Enough to Influence Indicator Summary
Stocks bounced this week, but the bounce was clearly not enough to rattle the indicator summary, which remains firmly negative. The AD Volume Lines surged, but remain well below their May support breaks and in downtrend. The major index ETFs also surged, but have yet to negate the May support breaks, which turn into first resistance. The volatility indices fell back, but are nearing support from their resistance breakouts in May and fear remains in an uptrend. In short, this week’s bounce looks like a mere oversold bounce within a bigger downtrend.
- AD Lines: Bearish. The Nasdaq and NYSE AD Lines surged this week, but it was not enough to negate the selling pressure seen in May. The support break is still holding for the NYSE AD Line and the Nasdaq AD Line are below the December lows.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines both surged this week, but remain below the May support breaks and below the late May highs.
- Net New Highs: Bearish. Nasdaq Net New Highs edged back into positive territory, but the cumulative line is well below the 10-day EMAs. NYSE Net New Highs moved modestly into positive territory, but the cumulative line remains just below the 10-day EMA and in a downtrend since early May.
- Bullish Percent Indices: Bearish. Five of the nine BPIs are below 50%. The Consumer Discretionary Bullish% Index ($BPDISC) moved below 50% this week to tilt the balance.
- VIX/VXN: Bearish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) pulled back to broken resistance from the February-April highs. This level becomes support and the May breakouts are still holding.
- Trend-Structure: Bearish. DIA, IWM, MDY and SPY all broke support levels in May and these support breaks turn into resistance. At the very least, a move back above broken support is needed to negate the May breakdowns.
- SPY Momentum: Bearish. RSI bounced above 45, but resistance is expected soon as the 50-60 zone nears. MACD(5,35,5) is in negative territory and the Aroon Oscillator remains below -50.
- Offensive Sector Performance: Bearish. XLF, XLK and XLY led this week’s oversold bounce, but all three are still below their May support breaks and in downtrends overall. Also note that the defensive sectors continue to hold up better. XLU hit another 52-week high this week.
- Nasdaq Performance: Bullish. The $COMPQ:$NYA ratio is holding up because the NY Composite ($NYA) is now leading the Nasdaq lower. $NYA can blame the industrials and finance sectors for relative weakness since early May.
- Small-cap Performance: Bearish. The $RUT:$OEX ratio peaked in early February, broke below its November low in April and remains in a downtrend. Small-caps have been relatively weak for over four months now.
- 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