The Technical’s Stand Out in This Bull Market

The Technical’s Stand Out in This Bull Market

The Technical’s Stand Out in This Bull Market


This, the strongest earnings season since Y 2011, is coming to a close, and with the S&P 500 and NAS Comp and DJIA at or near record highs, the biggest concern for some market analysts is why there is so little concern up at these marks.

The largest daily move on the S&P 500 in almost 3 weeks was just 0.4%. The small daily moves are partly the reason for a 24-year closing low hit this week on the CBOE Volatility index (VIX), a measure of investor “fear” and anxiety.

People worried about the market on a technical basis are worried because there is too much optimism, but not on an indication that there is some kind of top forming in here

The S&P 500 posted record closing highs 2X last week, but both were lower than the intra-day high set on 1 March, just below 2,401. The intra-day record high set last Tuesday, near 2,404, does not signal a breakout from the resistance level set some 11 weeks ago.

Because of the sideways move, momentum has not mirrored what was seen in early March. The 14-day momentum measure of the S&P peaked this year on 1 March.

Friday it closed at its weakest mark in about 3 weeks.

The NAS Com, closed Friday almost 4% above its 1 March close and set intra-day and closing records on the week, is showing weak pattern in terms of breadth.

The 50-Day Average of advancing names on NAS peaked this year mid-January and is in a clear trend lower. It hit its lowest level this year on 5 May, and the spread with the 50-Day Average of decliners has been in and out of negative territory since early March.

 Waning breadth suggests the market advances on less than solid ground as fewer and fewer stocks participate to the Northside move.

On the S&P 500 the 50-Day advancers average is at its lowest level since the 8 November Presidential election. However, with the index trading basically sideways (consolidating the move) since the March record, the signal is  misleading.

Shayne and I still have a positive view of this market, we see this as the continuation of a consolidation frame the markets have been in since 1 March considering these YTD moves: NAS Comp +14.2%, S&P 500 +7.3%, and DJIA +6.2%.

We have learned to pay keen attention to the leadership, the setups and always take what the market gives, hedging our bets along the way.

In the case of the DJIA the 50-Day Average of advancers is also near the lowest level since November. Apple Inc (NASDAQ:AAPL) is responsible for 25% of the DJIA’s advance on a non-weighted market cap basis.

The Dow Transport Average peaked with the industrials on 1 March is more than 6% off its highs, while the DJIA is than 1% below its record highs

A record on the industrials without the confirmation of the transports may well be “bad omen” for stocks.

Timing cannot be called, but let’s not forget that divergence present between the Dow Industrials and Transports was present at major tops in Y’s 2000, 2007 and 2015.

Monday, the US major stock market indexes finished at: DJIA +85.33 at 20981.94, NAS Comp +28.44 at 6149.66, S&P 500 +11.42 at 2402.32

Volume: Trade on the NYSE came in heavy with 1.06-B/shares exchanged.

  • NAS Comp +14.2% YTD
  • S&P 500 +7.3% YTD
  • DJIA +6.2% YTD
  • Russell 2000 +2.7% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.30) Bullish (0.40) Neutral (0.17) Bullish (0.35)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.09) Neutral (-0.15) Neutral (0.19) Bullish (0.25)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.30) Neutral (0.23) Bullish (0.42) Bullish (0.25)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.33) Bearish (-0.27) Bearish (-0.35) Bearish (-0.38)

Have a terrific week.

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