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Market Breadth Weekly Update - 09/24/2016

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

We had FED's rate event on Wednesday. Thanks to the decision to keep the rate unchanged at low level, the indexes (the market) moved up strongly on September 21st of 2016. Yet, the post-FED rally lasted a day only. So far, it looks like the, the decision to keep low rates does not encourage long-term Bulls as it was 2 years ago - only short-term traders reacted on it. The rest of the investors, since basically nothing changed, are focusing on the analysis of fundamentals and technicals. The market is not driven by Apple company any more as well. Rumors about "amazingly huge" pre-order sales are fading away and AAPL stock does not rally any more.

As rumors are going away, the investors are going back to their indicators. As of now we continue to see the dominance of the long-term Bulls on the market:

  • 74% of the S&P 500 index listed stocks are bullish (higher than a week ago),
  • 80% of the DJI listed stocks are bullish (lower than a week ago),
  • 70% of the Nasdaq 100 index listed stocks are bullish (higher than a week ago),
  • 67% of the Russell 2000 index listed stocks are bullish (higher than a wee ago),
  • 74% of the NYSE Composite index listed stocks are bullish (higher than a wee ago).

Source: www.marketvolume.com/advance_decline/hig...

When we compare the resent Breadth numbers to what we saw a week ago, we may say that the market breadth sentiment improved in the favor of the long-term Bulls. However, it does not mean that we will see 20% rally next month. It means that we will not have a strong correction down. Over the past three months, despite the strong dominance of the long-term Bulls, the market indexes are in the side-way range trend. Yes, the long-term Breadth data show bullish sentiment, however, as soon as indexes move close to their highs, the Bulls easy their pressure. Bulls are strong and they jump in on even a small correction, yet, they are not willing to push the market above the current resistance levels.

Chart #1: NYSE Composite index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks

Chart courtesy of http://www.marketvolume.com/quotes/highlowrangechart.asp

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