Monday, April 12, 2010

Indicator Update for April 12th

Last week's indicator review found that we remained in a bullish trending mode, but that yellow signals were beginning to flash, indicating potential divergences.

This week, we see a continued uptrend among the S&P 500 sectors that I track with my proprietary measure of Technical Strength. Indeed, we're seeing particular relative strength among Consumer Discretionary and Energy shares, as well as Financial stocks. No sectors are in either neutral or bearish trend modes, telling us that market strength has been broad.

That breadth of market strength is also evident in the Advance-Decline line specific to NYSE common stocks (middle chart), a very useful indicator posted daily by Decision Point. Note that we've had many more days with advancing stocks leading declining ones over the past month; when decliners have led, they have not shown the kind of plurality that we saw during the previous market selloff. Quite simply, we're not seeing significant selling pressure in the market, which has also been evident in the positive Cumulative NYSE TICK balance, as noted by Market Tells.

Finally, we see that the percentage of stocks trading above their 50-day moving averages (bottom chart) as posted by Barchart, remains quite high and very near its peak since the February lows. This tells us that intermediate-term momentum remains strong, even as some shorter-term momentum measures show some divergences. (The percentage of stocks trading above their 20-day moving averages is at a bullish 71%, but down from the 80+% levels registered in March; new 20-day highs exceeded 1500 on Friday, down from over 3000 in March).

In all, we remain in a bull mode. Some caution lights around short-term momentum and strength remain, but we are not as yet seeing the kind of technical deterioration that normally accompanies a market about to tank. As always, I will update indicators daily via Twitter before the market open.