Market StatusThe charts will be updated by
every
Saturday. When no change to text, [NC] will be used. Stocks above their 50-day Moving Average
[NC] This chart shows the number of Nasdaq stocks
that are above their 50-day moving averages. The
horizontal lines at 20 and 75 are arbitrary, and sometimes tend to
indicate when a move is nearing an end. The Nasdaq
composite index ($COMPQ) is shown below on a percentage scale for
correlation. [NC] Notice
that there
was a negative
divergence between the indicator and the Nasdaq index in the spring of
2023. This indicates that the
rally is not as strong as it appears by
the index. This time the market continued up -- surprise! That was
because this market-weighted index is dominated by a few large tech
stocks. [NC] In May/June and October there was a rally
after a positive divergence. The
April 2023 high in the Nasdaq ($COMPQ) was not verified by the number of
Nasdaq stocks above their 50-day MAs. This is an indication that
the market will go lower. But maybe not as it went higher! In August there was a confirmation, not a divergence.
Now the indicator is coming down from an overbought condition and the
market is goint up! Unusual. The huge technology stocks are moving the
market. Bullish Percent Index[NC] The Bullish Percent Index ($BPSPX) for the S&P 500 stocks is shown together with the S&P 500 Index ($SPX) in dotted blue. The Bullish Percent Index takes a group of stocks and records the percentage of those stocks that have a Point & Figure Buy signal from their point and figure chart. The BPI for the S&P 500 stocks is shown over a 1.5-year period.
The green buy pole indicates when the index goes above 30. The
red sell pole indicates when the index goes below 70. These seems to be
a good indication of future market action. The
sell alert flashed on August 8. A
bull alert occurred on October 9,
however, that was reversed to a sell confirmation. On November 3 a true
bull alert occurred. The market at the end of December was very
overbought. A
consolidation was likely, and is over now. When the bullish percent went down, the SPX went up due to the large tech stocks that make up 35% of the index. The recent up move continues as additional types of stocks participate. Sector Bullish Percent [NC] Looking at the BPI of sectors is a good way to get a feel
for how they are performing. Click here to see charts for ten S&P market sectors.
Volatility[NC] The Volatility Index (VIX) shows the large-cap
market's expectation of 30-day volatility. The index is based on prices
of S&P 500 options that investors tend to rush to when they are
fearful of stock declines. The VIX is a widely used measure of market
risk and is often referred to as the "investor fear gauge". When the
fear is highest, the market is likely to bottom and start up as
all those in fear would have sold. There is greater detail at Investopedia.com. [NC] Below is a one-year plot of the
VIX with the S&P 500 on a percentage scale at the bottom. In
the middle is the RSI of the VIX. When the RSI hits the blue 60
line there is danger of a decline (starts with a red
vertical pole). When the RSI hits 45, green pole, the
probability of making money in the market can be much better. All
indicators lag the market, and are not good in a choppy market. A green
pole will not be placed if the VIX is above 20, and a buy alert
will be canceled if the VIX goes above 20. Note also that low
points in the market usually occur when the VIX peaks. [NC] A VIX Buy Alert,
based on the volatility of large-cap stock action, occurred on Thursday 11/2 (green pole). The traditional view is that
it is dangerous to be in the market when the VIX is above
20, and this had not happened since March 2023, except for a short time starting on 10/19. Margin Debt Impact
[NC] Notice the relationship of margin debt to the market.
This is the S&P 500 index. As Jill Mislinski states, "there are too few
peak/trough episodes in this overlay series to take the latest credit
balance data as a leading indicator of a major selloff in U.S.
equities. This has been an interesting indicator to watch and will
certainly continue to bear close watching in the months ahead."
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