Before this week started, we mentioned at https://seekingalpha.com/p/2zdct
"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."
The Nasdaq 100 index continue to outperform other indexes. As the Technology sectors recovers, the other market indexes also become positive. As of now we have following shorter-term Breadth sentiment on the S&P 500 and Nasdaq 100 indexes:
79 of the Nasdaq 100 stocks are above their 200-day SMAs - Bullish sentiment,
76 of the Nasdaq 100 stocks are above their 120-day SMAs - Bullish sentiment,
73 of the Nasdaq 100 stocks are above their 50-day SMAs - Bullish sentiment,
74 of the Nasdaq 100 stocks are above their 20-day SMAs - Bullish sentiment.
357 of the S&P 500 stocks are above their 200-day SMAs - Bullish sentiment,
335 of the S&P 500 stocks are above their 120-day SMAs - Bullish sentiment,
324 of the S&P 500 stocks are above their 50-day SMAs - Bullish sentiment,
294 of the S&P 500 stocks are above their 20-day SMAs - weak Bullish sentiment.
When you compare the data above to the past week sentiment (see at https://seekingalpha.com/p/2zdct), you will notice improvement on all time-frames.
As we mentioned in previous reports, when the long-term sentiment is Bullish, the Long-term Bulls will not the market to dive into a deep correction. If a few days ago, bearish sentiment was dominant on 20-day charts and it was Bullish on higher time-frames, now, we have Bullish sentiment on all time-frames.
The only disturbing signal is that we do not see a decrease in volatility.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.