Monday, October 19, 2009

Indicator Update for October 19th




Last week's indicator review found that we were seeing price strength in the major indexes, but signs of non-confirmations among several indicators. This past week registered fresh price highs, keeping most sectors in a bullish trending mode. Still, we continued to see non-confirmations among the indicators. The Cumulative Demand/Supply Index (top chart) continues to register lower highs, indicating a loss of upside momentum.

We also are seeing fewer new 20-day highs minus lows among NYSE, NASDAQ, and ASE stocks (middle chart), relative to the September levels. Similar readings are evident among the 65-day new high/low data. All of this suggests that participation to the upside has been more selective over time.

The advance/decline line data paint a more mixed picture. We did register new highs in the large cap indexes, including the A/D lines specific to the S&P 500 Index, the NASDAQ 100 Index, and even NYSE common stocks. As the helpful chart from Decision Point indicates (bottom), however, we have not seen similar new highs in the A/D line specific to S&P 600 small cap issues.

I continue to view this as a bull market. Note, for example, how pullbacks in the Cumulative DSI have occurred at successively higher price lows. Still, the indicators suggest that we may have registered a momentum high in September, with recent price highs coming on lower volume, lower momentum, and reduced participation. If that is the case, I would expect further corrective action prior to any fresh bull leg.

I will be tracking market momentum, trending, and strength each morning prior to the open via Twitter. You can follow the most recent five tweets on the blog page under "Twitter Trader" or you can follow the stream of tweets (and subscribe free of charge via RSS) by going to my Twitter page.
.

No comments: