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Over the past week my core market health indicators bounced around, but didn’t see significant improvement.

160722MarketHealth

However, I’m seeing other signs that the market can burst higher. First a weekly chart of the S&P 500 Index (SPX) has a clear break out of a bull flag with a successful retest (after a fake out). MACD confirmed the retest by not showing a bearish crossover. RSI on the weekly chart is also well above bear market levels.

160722SPXWeekly

Next we have the Nasdaq 100 (NDX) compared against SPX. This ratio is breaking above its 20 week moving average. This condition usually results in a market that moves higher. Technology has been lagging since December 2015, but it appears that it is starting to lead again. If this condition persists it should fuel a good sized move higher in the general market.

160722NDXSPX

The only fly in the ointment is Dow Theory. The transports (DJTA) still haven’t broken above their last secondary high. If DJTA can get above 8110 it will signal that we’re in a long term bull market again.

160722DowTheory

Conclusion

My core indicators and Dow Theory still aren’t confirming an all clear signal, but weekly SPX indicators and NDX performance suggest a good sized rally is in our future.

 
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