Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Bears Are Taking Over

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

As we predicted a week ago, the market is down for the week. As of now, the long-term Breadth numbers are:

  • 60% of the S&P 500 (SPY) index listed stocks are bullish - down by 3% from a week ago - Bullish sentiment;
  • 77% of the DJI (DIA) index listed stocks are bullish - down by 3% from a week ago - Bullish sentiment;
  • 58% of the NASDAQ 100 (QQQ) index listed stocks are bullish - down by 4% from a week ago - Weak Bullish sentiment;
  • 46% of the Russell 2000 (IWM) index listed stocks are bullish - down by 8% from a week ago - Bearish sentiment;
  • 40% of the NYSE index listed stocks are bullish - down by 6% from a week ago - Bearish sentiment.
    Source: Advance Decline Charts

The number of the long-term bearish stocks increased all across the market. We still have more than 50% of the bullish stocks in the Large Cap (S&P 500) market sector. However, the Small Cap (Russell 2000) is in the confirmed correction. Also, the number of the NYSE bearish stocks elevated to 60%. Therefore, we continue stuck with long-term bearish sentiment on the market.
NYSE Breadth chart

Short-term Breadth shows strong negative momentum in both Large Cap and Small Cap market sectors:

  • 58% of the S&P 500 stocks are above their 200-day MA - down by 1% from a week ago - Weak Bullish,
  • 54% of the S&P 500 stocks are above their 120-day MA - down by 5% from a week ago - Weak Bullish,
  • 47% of the S&P 500 stocks are above their 50-day MA - down by 6% from a week ago - Weak Bearish.
  • 46% of the Russell 2000 stocks are above their 200-day MA - down by 13% from a week ago - Weak Bullish,
  • 38% of the Russell 2000 stocks are above their 120-day MA - down by 10% from a week ago - Bearish,
  • 36% of the Russell 2000 stocks are above their 50-day MA - down by 4% from a week ago - Strong Bearish.
    source: https://www.marketvolume.com/advance_decline/market-breadth-charts.asp

The Bears are dominating the Small Cap sector. There is no panic selling, however, investors are selling Small Cap stocks.
The worst signal is that the number of the S&P 500 stocks traded below 50-day MA increased above 50%. It reveals that bearish sentiment is speeding out and now the Large Cap stocks are under the risk of a correction. If nothing positive cheers the investors into the buying, we should be ready to face a strong correction.
The Breadth momentum is strongly negative. The overall Breadth numbers are turning bearish as well. We have increasing volatility and bearish Money Flow. All of these suggest the higher odds of having another red week.
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.