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More Weakness Yet Holidays Are Coming

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

Summary

Long-term market Breadth sentiment

Shorter-term market Breadth sentiment

Market's volatility and volume analysis

Next week outlook

Thursday's decline pushed this week into negative territory. Respectfully we have natural weakening in the long-term Breadth data:

67% of the S&P 500 (SPY) index listed stocks are bullish - 2% less than a week ago;
80% of the DJI index (DIA) listed stocks are bullish - 3% more than a week ago;
68% of the NASDAQ 100 (QQQ) index listed stocks are bullish - 1% less than a week ago;
57% of the Russell 2000 index (IWM) listed stocks are bullish - 6% less than a week ago;
69% of the NYSE index listed stocks are bullish - 3% less than a week ago.
Source: https://www.marketvolume.com/advance_decline/market-breadth.asp

Even we continue seeing weakening in the long-term Breadth data, we are still far from big changes - the long-term market Breadth sentiment remains Bullish.

While the long-term Bulls are in charge, weakening itself suggests the increasing odds of a correction. By looking at the S&P 500 shorter-term Breadth data we see confirmation of that:

332 of the S&P 500 stocks are above 200-day MA - up by 2 from a week ago,
328 of the S&P 500 stocks are above 120-day MA - down by 1 from a week ago,
320 of the S&P 500 stocks are above 50-day MA - down by 11 from a week ago,
256 of the S&P 500 stocks are above 20-day MA - down by 17 from a week ago.
Source: https://www.marketvolume.com/stocks/select.asp?s=technical

On 20-day time-frame the S&P 500 Breadth sentiment is just a step away to be called bearish. On the other hand, the Nasdaq 100 Breadth numbers improved over the past week:

66 of the Nasdaq 100 stocks are above 200-day MA - up by 1 from a week ago,
63 of the Nasdaq 100 stocks are above 120-day MA - up by 6  from a week ago,
57 of the Nasdaq 100 stocks are above 50-day MA -up by 1 from a week ago,
58 of the Nasdaq 100 stocks are above 20-day MA - up by 7 from a week ago.

After several weeks of weakening in the Nasdaq 100 index, this week brought some relief. Based on this, despite, general weakening on the market, the market Breadth sentiment for the coming week should be considered neutral.

It is worth mentioning that past week brought us decline in average trading volume on the major indexes and more volatility. While the market is still at very low volatility levels, the increasing volatility itself is a bearish sign.

The important point id that the decline in volume was accompanied by the decline in market indexes. Based on this, we may say that the big fight between Bulls and Bears (last 3 weeks trading on very high volume) is coming to the end and it looks like the Bulls most likely are getting exhausted - drop in bullish pressure led to drop in volume and decline.  This would favor the Bears for the coming week.

In summary, when we look at Breadth, volume and volatility on the major market indexes, we have relatively neutral Breadth data and we have bearish signals on volume and volatility. Furthermore, we may assume the neutral-to bearish outlook for the coming week.

Also we have to bear in mind that we are entering Thanksgiving, Christmas and New Year Holiday-Shopping season. Traditional it is the best time of a year on the market - it is going to be very difficult for the Bears to push market lower during this time.

Charts courtesy of 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.