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Weakness In The Market Breadth

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), IWM, QQQ, SDS, SPY, SSO, UPRO

A week ago at https://seekingalpha.com/p/2zb2d we stated: "... In summary the Breadth sentiment favors negative trading for the coming week. However, the long-term Bulls are strong and should we see negative action on the market, most likely it will be used by the long-term Bulls to buy at low. ... All of these signals would support bearish outlook for the coming week. ..."

This week was bearish up to the last day of the week when on Friday July 7ths of 2016 the major market indexes recovered their weekly loses in a strong up-move.

As the market continues moving side-ways, we do not see a lot of changes in the market Breadth sentiment: As of now

70% of the S&P 500 index listed stocks are bullish - Bullish sentiment,;
77% of the DJI index listed stocks are bullish - Bullish sentiment,;
72% of the NASDAQ 100 index listed stocks are bullish - Bullish sentiment,;
63% of the Russell 2000 index listed stocks are bullish - Bullish sentiment,;
59% of the NYSE index listed stocks are bullish - Bullish sentiment,.
Source: https://www.marketvolume.com/quotes/highlowrangechart.asp

The market Breadth slightly weakened over the past week. However, the overall numbers still favor the Bulls. For as long as more than 50% of the stocks listed in the major indexes are bullish, we may say the risk of a recession and or market crash is very low - we are in the Bull market.

On the other hand, when we take a look at the short-term Breadth data, we see a different picture. As of now

76 of the Nasdaq 100 stocks are above their 200-day SMAs - Bullish sentiment,
72 of the Nasdaq 100 stocks are above their 120-day SMAs - Bullish sentiment,
50 of the Nasdaq 100 stocks are above their 50-day SMAs - Neutral sentiment,
39 of the Nasdaq 100 stocks are above their 20-day SMAs - up by 4 from a week ago - Bearish sentiment.
Source: https://www.marketvolume.com/stockscreener/nasdaq100scan.asp

354 of the S&P 500 stocks are above their 200-day SMAs - Bullish sentiment,
327 of the S&P 500 stocks are above their 120-day SMAs - Bullish sentiment,
297 of the S&P 500 stocks are above their 50-day SMAs - weak Bullish sentiment,
243 of the S&P 500 stocks are above their 20-day SMAs - weak Bearish sentiment.
Source: https://www.marketvolume.com/stockscreener/sp500scan.asp

The shorter-term Breadth data are almost the same as a week ago - not a lot of changes occurred here. The same as before, we have bullish mid-term (200-day and 120-day) sentiment and neutral to bearish short-term sentiment. The same as before, Breadth data favors bearish trading for the weak ahead.

While Breadth sentiment suggests bearish trading for the coming week, it is worth mentioning about the changes in the Technologies sector. Prior to this week, the Nasdaq 100 index (technology market sector) was the leader in the bearish trading. This week we witnessed change in this sentiment - the Nasdaq 100 was not declining as strong as S&P 500 and other indexes on negative days and on positive days the Nasdaq 100 was moving up stronger when compared to other market indexes. Taking into account that the technology market sector was the main reason of the current bearish mood on the market, change in the Nasdaq 100 behavior could signal coming positive changes in the market. However, at this point, this is just an observation and not a strong signal to dismiss completely negativity in the short-term Breadth sentiment.

Overall, the Breadth data are still weak and they are still point to the risk of having negative trading in week ahead of us.

Chart: NYSE Composite 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.