Info!! Indicator Review For July 7Th

Last week's indicator review noted that nosotros were oversold, but that indicators were weakening together with it was unsafe to endeavor to grab the falling knives. That turned out to endure pretty skilful advice, every bit nosotros became fifty-fifty to a greater extent than oversold (top chart)--reaching levels seen at recent intermediate-term marketplace bottoms--but continued to encounter an expansion of stocks making novel lows (middle chart). Buying sentiment, every bit measured past times the cumulative TICK (bottom chart) remains nowhere to endure seen, every bit bounces convey led to reversals. In short, the weak marketplace has larn weaker. Traders looking for signs of capitulation inwards the commons indicators convey been frustrated; it's been a grinding refuse rather than a sudden panic.

The advance-decline lines specific to NYSE mutual stocks together with S&P 500 issues convey both moved to comport marketplace lows this past times week. We've likewise seen an expansion inwards the number of stocks making fresh 52-week lows. The over-300 novel lows alongside NYSE mutual stocks eclipsed the March level, though the 90+ novel lows alongside S&P 500 stocks rest beneath the peaks from Jan together with March (though soundless expanding). Only 14% of NYSE stocks are trading higher upwardly their 50-day moving averages, likewise quite an oversold grade commensurate with recent intermediate-term marketplace bottoms.

When markets brand a bottom, nosotros similar to encounter divergences together with a narrowing of participation to the downside. Recently, however, the reverse has been the case. Sectors that had been strong, such every bit materials, convey joined the downside together with the modest caps, which had been showing relative strength, convey been quite weak of late. Indeed, entirely 14% of S&P 600 modest cap issues are trading higher upwardly their 50-day moving averages, downwards from 70% inwards May; a grade similar to the marketplace overall, every bit noted above.

With the widening number of issues making novel lows, the falling advance-decline lines, together with the weak sentiment/TICK, I in 1 trial once to a greater extent than am non inclined to endeavor to alternative the bottom. We're overdue for a bounce, together with we're at oversold levels that convey been associated with marketplace rallies. Until nosotros encounter only about stabilization alongside the housing together with banking issues, however, I suspect it volition endure hard to sustain whatever such rallies. As always, I volition endure updating many of these indicators inwards my daily Twitter posts, along with links to posts together with articles on marketplace moving themes.
.

Info!! Sector Update For September 7Th

What a difference a calendar week makes. The final sector update institute the bulk of sectors inward small-scale uptrends, amongst testify of sector rotation rather than strong upward trending. Over the by week, money has continued to menstruum out of stocks too most of our sectors stimulate got flipped from small-scale uptrends to small-scale downtrends. What this agency inward utilisation is that I'm viewing the marketplace through ii sets of lenses. One is the lens of the short-term trader, who is seeing the marketplace weaken from solar daytime to day, calendar week to week. (By Friday, for example, nosotros posted over 2400 fresh 20-day lows amidst NYSE, NASDAQ, too ASE issues; a total indicator review volition look tomorrow AM and, equally always, I volition travel updating the indicators prior to each trading solar daytime potentially meaning divergences betwixt the electrical current marketplace activeness too the weakness that nosotros saw at the July lows. In short, we're seeing more fearfulness too selling than inward the by few weeks, precisely fewer stocks are participating inward that selling than at recent marketplace lows.

So basically nosotros stimulate got ii scenarios: the kickoff is that we've begun a fresh leg downwards inward the marketplace too volition decisively accept out the July lows across the major indexes. The 2nd scenario--and, frankly, the 1 I'm leaning toward--is that the July through early on September weakness is business office of a bottoming process, amongst waning participation to the downside.

Here are the Technical Strength (trending) numbers for each of the 8 S&P 500 sectors that I follow, amongst the pct of stocks inside each sector trading higher upward their 50-day moving average (in parentheses):

MATERIALS: -80 (40%)
INDUSTRIAL: -200 (20%)
CONSUMER DISCRETIONARY: -100 (57%)
CONSUMER STAPLES: +40 (61%)
ENERGY: -460 (5%)
HEALTH CARE: -240 (30%)
FINANCIAL: +240 (64%)
TECHNOLOGY: -320 (19%)

We tin come across that the unloose energy too technology scientific discipline shares are dramatic underperformers, equally the marketplace is pricing inward the effects of slow/no increase inward the economy. Consumer staples stocks are outperforming equally defensive issues, but--interestingly--we're too seeing underperformance amidst wellness assist shares. That may reverberate renewed concerns nearly cost-cutting inward that expanse inward the wake of the Presidential election. Amazingly, fiscal shares are leading the pack; it volition travel interesting to come across how they response to the regime bailout of FNM too FRE.

Note how the percentages of stocks higher upward the 50-day moving averages is quite discrepant across sectors: in 1 lawsuit again, we're seeing enough of sector rotation. At this point, the percentages are non nigh levels ordinarily associated amongst intermediate-term marketplace bottoms, despite the fact that we're at fresh annual lows inward the NYSE Composite Index too nigh those lows inward the S&P 500 Index. This is however unopen to other reflection of the divergences I'm seeing inward the electrical current market. Either nosotros stimulate got much farther to larn on the downside, or the bulk of shares stimulate got set inward their lows for the electrical current comport cycle. I'll travel tracking the indicators closely to handicap the odds of these really dissimilar scenarios; remain tuned...
.