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Short-Term Bulls On A Rise

|Includes: SPDR Dow Jones Industrial Average ETF (DIA)

As we mentioned a week ago:

  • "... Next week's outlook favors the Bulls slightly ..."

The market (major market indexes) is up for the week - the S&P 500 (SPY) is 1.9% up, the DJI (DIA) is 1.6% up and Nasdaq 100 (QQQ) is 2.2% up for the week.

As of the end of the week, we have following market Breadth:

  • 21% of the S&P 500 index listed stocks are bullish - up by 1% from a week ago - Bearish Breadth;
  • 33% of the DJI index listed stocks are bullish - up by 10% from a week ago - Bearish; Breadth
  • 24% of the NASDAQ 100 index listed stocks are bullish - up by 2% from a week ago - Bearish Breadth;
  • 15% of the Russell 2000 index listed stocks are bullish - down by 1% from a week ago - Strong Bearish Breadth;
  • 14% of the NYSE index listed stocks are bullish - down by 1% from a week ago - Strong Bearish Breadth.source: https://www.marketvolume.com/advance_decline/

This was the second in a row green week. The S&P 500 is 7.6% up from the reversal on 12/26/2018 and it is natural to see an increase in the number of the Bullish stocks. However, the main increase in the number of the long-term bullish stocks comes to the Large Cap market indexes (S&P 500, DJI, Nasdaq 100). When we check the Small Cap sector (indexes covering the Small cap stocks) we will see a different picture.

The Russell 2000 (IWM) and NYSE Composite indexes have recovered strongly as well. However, the recovery on these market indexes was not accompanied by an increase in the number of the long-term Bullish stocks. The long-term investors are not confident enough in the market to invest into the riskier stocks.

The number of the long-term bearish stocks remains high on the NYSE. The long-term market Breadth is bearish - sign of the long-term recession (Bear market).

NYSE Breadth chart

As we dig down from long-term into lower-term time-frames, we are witnessing a stronger increase in bullish activity:

  • 18% of the S&P 500 stocks are above their 200-day MA - up by 3% from a week ago - Strong Bearish Breadth,
  • 11% of the S&P 500 stocks are above their 120-day MA - up by 1% from a week ago - Strong Bearish Breadth,
  • 11% of the S&P 500 stocks are above their 50-day MA - up by 5% from a week ago - Strong Bearish Breadth,
  • 16% of the Russell 2000 stocks are above their 200-day MA - up by 2% from a week ago - Strong Bearish Breadth,
  • 11% of the Russell 2000 stocks are above their 120-day MA - up by 1% from a week ago - Strong Bearish Breadth,
  • 21% of the Russell 2000 stocks are above their 50-day MA - up by 9% from a week ago - Bearish Breadth.

The Breadth sentiment remains strongly Bearish in both Small Cap and Large Cap market sectors. At the same time, we recorded a strong increase (especially relatively to 50-day SMA) in the number of the bullish stocks. Short-term traders are buying all across the market - we have strong bullish Breadth momentum. For the coming week, the Breadth data point to the higher odds of positive trading.

Russell 2000 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.