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Market Breadth Update

|Includes: DIA, IWM, SPDR S&P 500 Trust ETF (SPY)

Friday's strong decline affected the Breadth data. As of now, we have

71% of the S&P 500 listed stocks are bullish (lower than a week ago),
83% of the DJI listed stocks are bullish (lower than as a week ago),
65% of the Nasdaq 100 listed stocks are bullish (lower than a week ago),
62% of the Russell 2000 listed stocks are bullish (lower than a week ago),
72% of the NYSE Composite index listed stocks are bullish (lower than a week ago).
Source: http://www.marketvolume.com/quotes/highlowrangechart.asp

Note: "Bullish stocks" are the stocks traded closer to their 52-week highs and "bearish stocks" are the stocks traded closer to their 52-week lows.

The Breadth data weakened, however, the numbers still favor the long-term Bulls. From one side the drop in the number of the Bullish stock is a negative sign. From other side, according to the Breadth numbers, the Bulls remain strong - it will take more than one-day decline to overpower the long-term Bulls.

At this point of time, after strong Friday's decline it is worth taking a look where the stocks are traded in relation to their major moving average - to take a look not just at long-term Breadth data, but on mid- and short-term market Breadth outlook also. As of now

We still have 322 of the S&P 500 listed stocks are traded above their 200-day SMA
http://www.marketvolume.com/stocks/filter.asp?s=ma&t0=1&t1=10000&v=1&optCriteria=12&t=SPX&p1=200
long-term investors on these stocks most likely will consider current correction as a minor temporary swing.

We have 292 stocks in the S&P 500 index moving above their 150-day simple moving average
http://www.marketvolume.com/stocks/filter.asp?s=ma&t0=1&t1=10000&v=1&optCriteria=12&t=SPX&p1=150
58% of the S&P 500 stocks are in the safe zone.

When i comes to 120-day MA we have only 260 of the S&P 500 listed stocks moving above it
http://www.marketvolume.com/stocks/filter.asp?s=ma&t0=1&t1=10000&v=1&optCriteria=12&t=SPX&p1=120
The balance between bullish and bearish stocks on this very popular timeframe could be considered neutral.

On 100-day timeframe we already see small dominance of the Bears - here, we have 239 S&P 500 listed stocks moving above their 100-day SMAs:
http://www.marketvolume.com/stocks/filter.asp?s=ma&t0=1&t1=10000&v=1&optCriteria=12&t=SPX&p1=100

When we drop to lower time-frames we may see stronger dominance of the Bears. Such, only 170 (34%) of the S&P 500 listed stocks are traded above their 50-day SMAs:
http://www.marketvolume.com/stocks/filter.asp?s=ma&t0=1&t1=10000&v=1&optCriteria=12&t=SPX&p1=50

Overall from these data, we may see that the long-term bulls are still strong, however, on the mid-term and especially on the short-term, the Breadth data are started to favor the Bears. While it may look like Friday's decline should not be considered as a threat to a long-term investors at this time, it definitely woke up the mid-term Bears. It was not an action of short-term traders - Mid-term traders were taking profit on Friday.

Chart #1: S&P 500 index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.