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Opposite Signals

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

Summary

Long-term market Breadth.

Short-term market breadth.

Next week outlook.

This wee was modestly bullish, yet, it did not affected positively long-term market Breadth:

  • 64% of S&P 500 (SPY) index listed stocks are bullish - the same as a week ago - Bullish Breadth;
  • 67% of DJI (DIA) index listed stocks are bullish - down by 6% from a week ago - Bullish Breadth;
  • 60% of NASDAQ 100 (QQQ) index listed stocks are bullish - the same as a week ago - Bullish Breadth;
  • 58% of Russell 2000 (IWM) index listed stocks are bullish - down by 1% from a week ago - Bullish Breadth;
  • 49% of NYSE index listed stocks are bullish - up by 2% from a week ago - Neutral Breadth.
    source: https://www.marketvolume.com/quotes/highlowrangechart.asp

The major market indexes moved up modestly this week. However, long-term market Breadth was either unchanged or weakened. The NYSE Composite index is the only exception. Here, the index advance was supported by increase in the number of the bullish stocks. On the rest of the market indexes, we recorded an increase in the number of the bearish stocks. This negative Breadth divergence is a bad sign for a future long-term market trend.
The worst sign is that despite relatively positive trading on the Russell 2000 (Small Cap sector), we see a drop in the number of the bullish stocks in this sector. When investors are abandoning a Small Cap stocks it means that they are trying to avoid risk and they are uncertain about future.
As was mentioned above, the number of the NYSE bullish stocks increased over the past week. Now, we may change the long-term market Breadth sentiment from Weak Bearish to Neutral.
NYSE Long Term Breadth chart

Short-term market breadth sends us mixed signals:

  • 60% of S&P 500 stocks are above 200-day SMA - unchanged from a week ago - Weak Bullish Breadth,
  • 65% of S&P 500 stocks are above 120-day SMA - up by 2% from a week ago - Bullish Breadth,
  • 65% of S&P 500 stocks are above 50-day SMA - up by 4% from a week ago - Bullish Breadth.
  • 59% of Russell 2000 stocks are above 200-day SMA - down by 6% from a week ago - Weak Bearish Breadth,
  • 56% of Russell 2000 stocks are above 120-day SMA - down by 2% from a week ago - Weak Bullish Breadth,
  • 47% of Russell 2000 stocks are above 50-day SMA - down by 2% from a week ago - Weak Bearish Breadth.
    source: https://www.marketvolume.com/advance_decline/

We have an increase in the number of the short-term bullish stocks in the Large Cap (S&P 500) market sector. At the same time, we are witnessing a strong increase in the number of the bearish stocks in the Small Cap (Russell 2000) market sector. Those are opposite signals. Taking into account that Russell 2000 ended the week in green, a strong drop in the number of the bullish stocks on this index should be considered as a strong negative signal.
Because of the opposite signals in Small Cap and Large Cap sectors, the overall Breadth outlook for the coming week is uncertain. It could be considered neutral with light negative bios.
S&P 500 Percent above 50-day MA

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