Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Corporate Earnings No Help.... Stock Market Breadth On The Decline

Stock-Markets / Stock Markets 2015 Jul 25, 2015 - 03:47 PM GMT

By: Jack_Steiman

Stock-Markets

Last night we saw a strong move higher out of Amazon.com Inc. (AMZN), everyone's favorite, all-time froth stock. They reported earnings. Yes, it can happen. The stock blasted higher, and so did the futures, but that wasn't the only reason the stock futures shot up. There were other solid reports wrapped around one bad report from TripAdvisor Inc. (TRIP). Visa Inc. (V), Starbucks Corporation (SBUX), and others were great, so the combination of good reports had the Nasdaq futures exploding higher by nearly fifty points. Everything was set up to reverse the recent move lower on the indexes off the top. The futures held somewhat overnight, but started to give it up some when biotechnology leader, Biogen Inc. (BIIB), came in with a dud for their report on earnings.


That whole sector started to feel the pain, which, in turn, took the futures well off their highs. The S&P 500 was almost red at the open. The market opened, but within a few minutes, the move lower began with some real force behind it. That trend held in place for the rest of the day, with the market closing down hard, although a bit off the lows, which is nothing to celebrate. The short-term sixty-minute charts were going as low as fifteen on the Dow, before the mini-bounce late in the day. That's real selling folks. The other day I spoke about how the 90 RSI reading on the short-term Nasdaq chart, other technology stocks, really wasn't a good thing. That we would have to unwind, and unwind we have done.

It's not healthy to get that type of overbought reading. We are paying the price for it all right now. We closed very oversold on the short-term charts, thus, it seems likely that, at some point on Monday, we should try up a bit even if it's only a temporary move at that. 209.00 on the Spy is now some resistance. Today was a solid day for the bears. Nothing to get overly excited about as the magnitude of the selling off the top has, thus far, been on light volume, but selling it was, and the bears will take it. They'll take anything that gives them hope of someday eradicating S&P 500 2040 with force. They'll sleep better this weekend.

Breadth. This tells us how the market is looking deeper down when selling or buying is taking place. When markets are rising you want to see breadth rocking higher. More winners than losers on a very consistent basis. On the decline you want to see losers well out pacing the gainers. Although the indexes are hanging around more positively than not, breadth is not holding up nearly as well. Fewer and fewer stocks have been carrying the day for the bulls, and that's not good for longer-term gains. Too many sectors are breaking down. Over the past few days to weeks we have lost some areas of significance in the market that had been bullish earlier this year. The first bad move lower came from the transports. The railroads are the biggest catalysts to the move down. The airlines are a close second.

Very few, if any, areas within the transportation sector are acting well. That has not changed. Oversold is staying that way. We're now adding in bad news from other areas, such as those semiconductors, industrials, and the chemical stocks, which had been awesome for quite some time. Not the case any longer. Within all of these sectors we are also seeing leading stocks go away. Apple Inc. (AAPL) did a classic breakdown on earnings, and after back-testing it lost 20- and 50-day exponential moving averages, and tanked out. It is now two-plus percent below them. Poor, if not, bearish action. That stock needs to be watched carefully for further clues regarding the entire market. Breadth has been on the decline, even on the good days, and this is a major-league red flag. Volume isn't a problem yet, but it may join in shortly, if breadth doesn't pick up in favor of the bulls shortly.

So, with all that I've written about this evening you'd think I'd be very bearish. Not at all, but I have turned extremely cautious. Red flags are abounding. Add in that froth rocked again this week, and we have the making of a potential headache for equities. But we're not there yet. In the end, it is all about whether the bears can look at S&P 500 2040 in the eye, and take it down below with force. The bulls are losing ground, but they aren't dead until 2040 says see you later. It can look real bad at the bottom and real good at the top, but that's meaningless. The bulls and bears have found ways to save themselves time-after-time when things looked dire. It's starting to look bad again for the bulls, but let's see if they can pull the latest version of a rabbit out of their hat. It's below 2040 and above 2134 that matter.

Nothing else. Don't lose sight of that reality. Don't let emotion take over. Keep calm. See the break one way or the other, and then respond.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 15-Day Trial to SwingTradeOnline.com!

© 2015 SwingTradeOnline.com

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in