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S&P Strong, DJI And Russell 2000 Not - Next Week Breadth Sentiment

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

The S&P 500, DJI, Russell 2000, Nasdaq 100 and NYSE Composite are close to their resistance

The investors are back from their vacations

Long-term and short-term market Breadth sentiment

A week ago at https://seekingalpha.com/p/2zyy0 we stated

"The overall Breadth sentiment is still Bullish, yet, it is much weaker that a day before. The most negative thing is here is that  the number of the S&P 500 stocks moving above their 200-day MA went strongly down from Bullish into weak Bullish zone. This would favors the Bears. Further increase in the number of the Bearish stocks on the S&P 500 index would be a confirmation of a strong correction."

The first week of September brought us increase in trading volume, drop in volatility and weaker Breadth sentiment:

68% of the S&P 500 index listed stocks are bullish - 1% less than a week ago;
70% of the DJI index listed stocks are bullish - 7% less than a week ago;
73% of the NASDAQ 100 index listed stocks are bullish - 4% less than a week ago;
53% of the Russell 2000 index listed stocks are bullish - 3% less than a week ago;
59% of the NYSE index listed stocks are bullish - 1% less than a week ago.
Source: High-Low Range Charts

The long-term Breadth sentiment is Bullish. While the overall numbers continue to favor the long-tern Bulls, the Russell 2000 index dropped into a "danger area" where further drop in the number of the bullish socks on this index would be a sign of bearish dominance in the Small Cap market sector.

We have to mention that all the major indexes have been moving side-way for some time: DJI (DIA) for a month, S&P 500 (SPY) and Nasdaq 100 (QQQ) for three months and Russell 2000 (IWM) since December of 2016. As of now, all these indexes are at the upper part of their side-way resistance corridors and by looking solely on price data, a technical analyst may see positive signals. However, the Breadth data show different picture - the decline in the number of the bullish stocks while these indexes are moving side-way at the top is considered as a negative divergence and, usually, it could be witnessed before a correction.

There is no doubt that the coming from their vacations investors are not in a bullish mood. The August's last week strong recovery was stopped. To understand better what to expect, this time we checked shorter-term Breadth sentiment on the S&P 500, DJI, Nasdaq and Russell 2000 indexes.

306 of the S&P 500 stocks traded above 200-day SMAs - Bullish,
286 of the S&P 500 stocks traded above 120-day SMAs - weak Bullish,
260 of the S&P 500 stocks traded above 50-day SMAs - weak Bullish,
318 of the S&P 500 stocks traded above 20-day SMAs - Bullish.

18 of the DJI stocks traded above their 200-day SMAs - Bullish,
17 of the DJI stocks traded above their 120-day SMAs - Bullish,
15 of the DJI stocks traded above their 50-day SMAs - Neutral,
15 of the DJI stocks traded above their 20-day SMAs - Neutral.


73 of the Nasdaq 100 stocks traded above 200-day SMAs - Bullish,
65 of the Nasdaq 100 stocks traded above 120-day SMAs - Bullish,
57 of the Nasdaq 100 stocks traded above 50-day SMAs - weak Bullish,
66 of the Nasdaq 100 stocks traded above 20-day SMAs - Bullish.

848 (48 less than a week ago) of the Russell 200 stocks traded above 200-day SMAs - Bearish,
859 (65 less than a week ago) of the Russell 200 stocks traded above 120-day SMAs - Bearish,
810 (87 less than a week ago) of the Russell 200 stocks traded above 50-day SMAs - Bearish,
11097 (236 less than a week ago)of the Russell 200 stocks traded above 20-day SMAs - weak Bullish.
Source: https://www.marketvolume.com/stockscreener

Strongest drop in the number of the Bullish stocks was recorded on the DJI and Russell 2000 index. Last time such weak Breadth on the Russell 2000 index was seen during the correction in November of 2016. The same could be said about the DJI index.

The S&P 500 index is one of the indexes holding the dominance of the Bulls basically unharmed - here, the number of the S&P 500 Bullish stocks is strong on all timeframes. However, should DJI and Nasdaq 100 dive into a correction, the S&P 500 will follow.

Because of the strong weakness in the DJI and Russell 2000 index, the next week Breadth sentiment is considered Bearish.

Market Breadth charts (https://www.marketvolume.com)


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