Info!! Indicator Review For June 9Th

Last week's indicator review emphasized a lack of buyer involvement manifesting itself across a diversity of measures. Particularly noteworthy were weakness inward coin flows together with inward the Cumulative NYSE TICK. That lack of involvement translated into farther toll weakness this by week, every bit the S&P 500 Index ($SPX) moved to multi-week lows.

On Friday, nosotros had 402 novel 65-day highs across all NYSE, NASDAQ, together with ASE issues against 360 novel lows (top chart). The latter is the highest compass of novel lows since mid-April. H5N1 like painting exhibit tin forcefulness out live on seen alongside fresh 20-day lows across the exchanges. Fri recorded 642 novel 20-day highs against 1242 novel lows. That is the highest compass of novel 20-day lows since March 20th.

This weakness has hitting a bulk of stock marketplace sectors. Only the loose energy sector of the S&P 500 Index continues to register positive values inward my Technical Strength index of trending. Among the forty stocks inward my basket, evenly drawn from 8 S&P 500 sectors, nosotros accept every bit of Fri vii stocks inward uptrends, 4 neutral, together with 29 inward downtrends. Only 43% of S&P 500 stocks are straight off trading inward a higher identify their 50-day moving averages, downward from 80% at the marketplace peak. Only 29% of those stocks are straight off trading inward a higher identify their 20-day moving averages.

Despite this weakness, nosotros are non withal recording meaning oversold levels inward my Cumulative Demand-Supply Index (middle chart), though the index has been deteriorating for a while. Readings below -20 accept tended to accompany skilful intermediate-term buying opportunities; the electrical flow reading is -4.69.

Money flows for the Dow thirty industrial stocks (bottom chart) rest negative, with the four-day average continuing below the nix line. That agency that to a greater extent than dollars are flowing out of those stocks than coming in. Interestingly, coin flows during the final few days of weakness accept non been every bit negative every bit seen a twosome of weeks ago, only this volition entirely live on an of import constituent for stocks if nosotros commencement to come across divergences inward other measures, such every bit the novel highs/lows.

In all, there's non much to live on excited well-nigh for the bulls. H5N1 hold off at the sectors shows fresh send marketplace lows for banking stocks together with homebuilder shares. These sectors are the equivalent of the tech stocks during the 2000-2003 downturn; it is hard to imagine a sustained bull marketplace with these leading the downside.

RELEVANT POST:

Review of Sector Performance
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Info!! The Bollinger Balance: Tracking Stock Marketplace Pull In Addition To Weakness

Recent posts guide keep focused on ways of gauging broad marketplace pull as well as weakness past times tracking the broad make of private stocks, rather than past times relying alone upon a stock index.  These marketplace gauges include the percent of stocks trading inward a higher house their volume-weighted average prices; the upticks as well as downticks with all stocks trading inward the U.S; as well as intraday novel highs as well as lows with U.S. of America stocks. 

Such measures furnish several advantages.  First, they are a banking concern stand upwards for on the activeness of the capitalization-weighted stock indexes, which tin appear strong or weak only because of the activeness of a relatively modest pose out of highly weighted shares.  Influenza A virus subtype H5N1 practiced event of this was the runup to the July 24th highs inward the large cap marketplace (SPX).  My stair out of fresh three-month novel highs with stocks listed on major exchanges was 636 on June 9th; 836 on July 1st; as well as 363 on July 24th.  That waning upside participation equally a rally matures is a useful agency to guess the relative wellness of the marketplace motion that y'all can't become past times looking at the nautical chart of the index alone.

The minute payoff of these measures is that they furnish prisms through which I tin sentiment as well as empathize the market.  This is where marketplace analysis meets trading psychology.  I download, archive, as well as review all of these indicators every twenty-four hours as well as and then on a larger painting demo footing every weekend.  Day after twenty-four hours of seeing the patterns inward the data--and the relationships with the measures--provides an insight as well as experience into markets that is useful deliberate practice.  

Above is even hence roughly other marketplace stair out I expect at daily that I've dubbed "the Bollinger balance".  (Credit to John Bollinger for insights into this indicator as well as to the Bollinger information tracked on the splendid Stock Charts site.)  In this measure, I only accept the difference betwixt the pose out of NYSE stocks that closed inward a higher house their upper Bollinger Band minus the pose out that closed below their lower band.  What I'm looking for is whether nosotros reckon signs of expanding pull vs. weakness with the broad make of shares.

You tin reckon from clicking the nautical chart inward a higher house that nosotros saw a declining Bollinger residual from early on June through later on July equally the marketplace was topping.  This divergence, along with the many sector divergences as well as divergences inward the novel high/low data, was identifying the waning participation to the upside--a useful heads upwards that the rally was losing steam.  

Fast frontwards to the introduce as well as y'all tin too reckon that the Bollinger residual has straight off been waning to the downside, fifty-fifty equally we've made novel lows inward the major indexes.  We're too seeing fewer shares making fresh three-month lows over the past times several sessions.  This suggests that selling is waning inward terms of breadth--a potentially useful heads upwards for traders gauging the introduce marketplace correction.

Further Reading:  Archived Posts on Market Indicators:  Volume One; Volume Two; Volume Three; Volume Four
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