With a slew of downgrades, the indicator summary moved to -6 and decidedly negative for the first time since December. The bull run was long (5+ months), but the evidence has clearly shifted as selling pressure accelerated this week. Net New Highs for the NYSE turned negative and hit their lowest level since November. The NYSE AD Line broke support with a sharp decline to start a downtrend. Volatility surged as the fear indices, VIX and VXN, broke resistance. At best, it looks like the market has entered a period similar to May 2010 or August 2011.
- AD Lines: Bearish. The Nasdaq AD Line broke to a 52-week low and is clearly in bear mode. The NYSE AD Line broke below its March-April high to start a downtrend this week. The 125-day EMAs of Net Advances for both the Nasdaq and NYSE moved into negative territory.
- AD Volume Lines: Bearish. The NYSE and Nasdaq AD Volume Lines formed head-and-shoulders patterns from February to April and broke support in May. The 125-day EMAs of Net Advancing Volume for both the Nasdaq and NYSE moved into negative territory.
- Net New Highs: Bearish. The cumulative Net New Highs lines for the Nasdaq and NYSE moved below their 10-day EMAs. Net New Highs on the NYSE dipped to their lowest level since November.
- Bullish Percent Indices: Bullish. Four of the nine sector BPIs are below 50% (energy, industrials, materials, technology). The consumer discretionary BPI is at 53.75% and the finance BPI is at 71.60%.
- VIX/VXN: Bearish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) broke above resistance that extended from February to April. Notice that an inverse head-and-shoulders formed and both broke neckline resistance. Rising volatility signals rising fear and this increases the propensity to sell.
- Trend-Structure: Bearish. DIA, IWM and MDY broke neckline support from bearish head-and-shoulders reversal patterns. MDY was exceptionally weak over the last few days. SPY and QQQ broke their March lows.
- SPY Momentum: Bearish. 20-day RSI moved below 30 for the first time since August. MACD(5,35,5) is at its lowest level since late November and the Aroon Oscillator moved below -50 for the first time since early December.
- Offensive Sector Performance: Bullish. XLY broke down on Thursday with a huge decline. XLI has been leading the market lower since mid March. XLF is unlikey to recover with the JPM fiasco looming and expanding. XLK broke below its March low. The three defensive sectors (XLP, XLU, XLV) are clearly holding up the best.
- Nasdaq Performance: Bullish. Believe it or not, the $COMPQ:$NYA ratio is holding up quite well. This is because the NY Composite ($NYA) is now leading the Nasdaq lower. $NYA can blame the industrials, finance and consumer discretionary sectors for relative weakness.
- 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 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-12
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
