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Wait and See

Over the past week, my core market health indicators didn’t move much. They continue to bounce around with the market.   One thing of concern is that a few measures of breadth are starting to show some weakness. Last month I highlighted the decline in the ratio between the S&P 500 Equal Weight Index (SPXEW) and the S&P 500 Index (SPX). It is still warning of a move to mega caps. The cumulative advance decline line for NYSE (NYAD) is now giving a small warning. The small dip in price for SPX caused a lot of damage to NYAD. The longer this indicator goes without making a new high the more serious the warning will become. I don’t get concerned until it diverges for two or three months so this is something to watch, not something to worry much about.   Another measure of breadth comes from Trade Followers Twitter sentiment. The count of bullish stocks diverged from price just before SPX moved to 2400. As the market tries to move higher

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Market Breadth Is Worse Than You Think

Last September there were a lot of market technicians talking about the number of stocks diverging from price and pointing out that market breadth was indicating a market top. I disagreed with that analysis and wrote a post about breadth not being as bad as it felt.  Today I’m seeing technicians pointing to the NYSE cumulative advance / decline line (NYAD) and its recent new highs and the number of stocks above their 200 dma above 80% as proof that the market should go higher. I’ll agree there are a lot of stocks advancing on a daily basis and NYAD is looking great.  The percent of stocks in the S&P 500 index above their 200 day moving average is still above 80% and is a great headline number.  Last September it was one of the things that kept me positive on the market.  Today that number doesn’t impress me so much.  Why?  Take a look at the damage done to this indicator in August and September of 2013.  Those market

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