* Continued Weakness in Cumulative TICK - My Cumulative TICK line has been showing notable weakness during the recent bounce and the last couple of days of pullback. This leads me to suspect that we're putting in a lower high in ES and could be testing the lows from earlier in the month. My indicators that treat buying and selling interest as separate variables show significantly below average buying interest all four trading days last week. During the last two sessions of the week, selling interest was pretty average relative to the prior 30 trading sessions. In short, buyers have been on strike. Tough to mount a rally when that happens.
* Weakening New High/Low Numbers - We've seen weaker numbers for 20-day new highs/lows over the past three trading sessions. On Friday, we had 509 new 20-day highs, against 903 new lows. Demand/Supply momentum numbers have also been negative the past two trading sessions. Among NYSE common stocks, we had 31 new 52-week highs against 87 new lows--the highest number of new lows in five trading sessions. We see a similar pattern among the S&P 600 small caps, where we had 6 new 52-week highs against 26 new lows, and among the S&P 500 large caps, where there were 12 annual new highs and 28 new lows.
* Technical Strength - Among my basket of 40 S&P 500 stocks highly weighted across eight sectors, we have 13 stocks qualifying as technically strong, 9 as neutral, and 18 as weak. That 's a considerable deterioration from earlier in the week. The Technical Strength Index closed on Friday at -400, which means that we've shifted from a preponderance of stocks in uptrends to a modest plurality in downtrends. The technical strength situation--and quite likely the S&P 500 Index as a whole--would be much weaker would it not be for the energy sector, which is contributing almost all the strength at present. Without those energy issues, we definitely have a majority of sectors in downtrends--even among the large caps. Note how we were seeing far greater strength on Wednesday.