NYMO is high

The market finally slowed its vertical assent upwards today, stalling at Friday's high at 134.10.  The market may finally be nearing some selling pressure.  These levels are decent resistance levels this area marks the former resistance from April before the market declined, as well as resistance from the February.  Above these levels also represent the 2011 highs. The market may have extended itself a little to much here and a small pull back at least to 131.77 would be healthy. But a ever further pull back may be in-store.

 

The McCllean Oscillator aka NYMO is at very high levels, this chart below shows the last two times NYMO was at these high levels above 80.  The last time NYMO was at these level was was last summer.  In fact looking last summer and this summer look very similar minus the "Flash Crash". 

If the market follows last summer, it will grind lower, then climb and eventually touch the 2011 highs before dropping again.  Overall after climbing around 8% in little over a week, the market needs a healthy pull back in order to determine if this is going higher or that was a great short squeeze while everyone was on vacation.

Internals for 1/19

NYAD- negative breadth and a close below the 8 day ema.  The 8 day was a rallying point for this entire rally, the break below it is bearish and the next stop would be the 19ema, and would mean a move to around the high 1260's.  NYAD will be key to watch going forward, if the moving averages start to turn we could be in for a strong move down, if not it could be another correction like we saw in November. 

NYMO- The bearish divergence proved correct and NYMO dropped below the zero line a bearish sign for the market.

Overall internals weakened yesterday and was the first sign of bearish price action.  The negative price action was slightly worse the the previous moves down which was "dip" opportunities. 

Who's holding this bag

Another new high for the market but who is pushing this market up.  It has been said the "retail" investor is left holding the bag of any bull market, and right now the big guys might be asking "Paper or Plastic".  Yesterday as the market broke to another new high, none of the strong internal indicators budged.  Not to much yesterdays volume was horrible. 

NYAD was actually down:

NYMO was down as, crossed zero and the divergence got stronger:

So who is buying this the big guy or the little guy?

Divergence all around

NYMO which is a measure of the market internals, is flashing more signs of weakness and a bearish divergence with the current SPX price action:  Had this been strong, then NYMO should have moved with it.  It has barely got above 20, which is weak but also odd. 

NYAD is another way to measure the breadth of the market.  Prior to this recently rally, NYAD would lead price and make new highs before price or with it.  Now we are seeing the opposite, with price leading breadth.

Indicators are also showing some divergence, look at the MACD on SPX, this really should be moving higher with the market, yet it isn't.  This is a text book example of "bearish divergence" using the MACD.

So what does this all mean, well it means that this most recently rally has be viewed with some skepticism and worry that breadth is not behind it. Does this mean that breadth can come in any time yes, but it also means if some selling starts there won't be the bid underneath the market to hold it up.

Exterme!

Here are a few internals that are showing exterme lows.

NYTV:NYUPV RATIO: Today was a .04

NYMO- Dropped below -100

NYAD- Dropped below its 39 EMA and its lower BB. Notice the last this occured.  Take note though it has never happened this fast.

Sunday Night Internals

Last week was a true victory for the bears the first since early February. The 1213 price level which was discussed on this site held as resistance.  But while price tells us one thing(price action will be disussed later on), there are other ways to understand the market. Breadth can tell a trader where the market is truly headed and if the price action is support by the internals.  Below are a few breadth indicators to watch.

Various indicators are on this chart, included are NYMO, Stocks in SPX above the their 50 day ema (SPXA50), and Stocks in SPX that are above their 200ma (SPXA200)

The first thing to notice is that the SPXA50 has been declining as the market trends higher and is making new highs.  This indicator shows that slowly stocks have been dropping below the 50 Day MA and 200 Day MA, which is not a bullish signal.   These indicators should have been either making new highs with the market or remaining at the extended levels they were at.  This failure shows weakness in the market as selling presure is pushing stock below key moving averages. NYMO has been an showing a bearish divergence sine late March a wedge has formed and a break could cluing us into where the market may go.

NYAD: This indicator has been accurate for the entire rally.  It has never corrected and flipped underneath it's moving averages as it did in 2007.  Each time it has made new highs the market has followed.  Currently it is sitting on its 8 Day ema for the 3rd time in the last week.  The pervious tops in the market have started with a pattern very similar to this.  Most of the tops have also started after NYAD touched the top of its BB.  If NYAD stays above its 8 Ema, it could be signalling another move up but negative price action could send NYAD towards it's 19 and 39 ema.  The tops have all marked a small correction as NYAD has never turned and trended down below its Moving averages.  Each time the 39 has provided a bouncing point.

TRIN: Not to much to report with TRIN it gave a Sell signal on April 23rd with the 21 crossing above the 55 Moving average

TICK: Tick has not been participating in this last rally.  Intra-day tick may be agreeing with the market but looking at TICK on a longer-term time frame it has failed to support the upside price action. It has failed to make new highs with the market.  Tick via it's moving averages is also trending down, and cautiously trending to dip below 100 and zero.  A dip below zero would signal some strong selling.  The blue lines on this chart are indications when TICK dipped below zero, and the pink are when it dipped above.

So to summarize the internals are showing some weakness, with many indicators pointing to bearish divergences and weakness in the breadth of the market.  What is ambiguous and is the million dollar question, is the market reloading or changing direction.  The next week or few days will show if the market is pausing to climb higher or there is a shift in the winds of the market.  A simple break of a key technical level could start some significant selling pushing all these indicators lower.  It is just to early to call right now. Price action has caused me to go slightly bearish, but if NYAD dips below its 8 day, and TICK dips further it could signal some selling pressure will be here and coming. So stay tuned and check out the post later on the price action!

Nearing the trend

In a stunning move yesterday, SPX managed to close down a half a percent.  Sending panic to most investors as the majority didn't understand what the red on their screens meant.  One trader on the floor said "I thought my machine was broken, the market is only suppose to go up I couldn't believe it crashed".

Now SPX is sitting on the almost vertical up trendline since Feb. It tested it yesterday but at the end of day the market rallied off it.  Additionally SPX is close to support at 1174.  Watch for a break of that level and a the trendline. MACD is still showing divergences as is RSI.  As of 7:49EST the market looks to be opening down and that trendline may be broken.  Be careful taking longs here, the rally just might be fading. 

NYMO gave a short-term sell signal yesterday dipping below zero as well. The bearish divergence on NYMO is still active.

Keep an eye on oil today it is weak, if it starts to sell off the market can follow.  Although Oil may be retracing back to the base of its break out of 83.66, watch that level.

Just a look at the market

Yesterday the market looked like it was going to begin it's Stage Two retrobooster burn to space after weaker then expected home sales came out(which I guess was good news) and Greece would be saved as a thank you for creating Diners in the United States.  But then Whammy, the Tres Auctions were horrible, and Greece was told go screw and the market sold off at resistance levels. But the bulls didn't loose any ground.

SPX still has its uptrend intact, but the evidence is starting to mount up that maybe SPX is nearing its stalling speed. Stoch is overbought and MACD may be rolling over. If you look at SPX on a candle stick chart, yesterday's candle was a shooting star which can be seen as bearish.

NYAD once again remains above its three significant moving averages.  Until there is bearish pressure to bring down NYAD the market still should advance or chop. Notice the past three rallies have ended when NYAD moved below its 8 day EMA. It sits on this line starting today, a down day would move it below the 8 day EMA.   

One shinning star for the bears is that NYMO has dipped below zero which is a technical sell signal. 

Internals

NYSI: Notice the pattern? First NYSI is hitting resistance at 1280 and the bb width has extended it's self.  When the moving average crosses the market has corrected it's self within a few days.

A couple of post ago I mentioned the divergence and said it was weak.  Now the divergence is strong since there has been a disconnect for the last couple of days.  NYMO almost crossed zero on Friday, which would have been a sell but yesterday it bounced to stay above it.  If the market is weak the next few days NYMO has a strong chance of crossing zero.

NYMO says "What"

NYMO has been moving opposite of the market the past three days indicating a bearish divergence.  There was a divergence earlier in the month that was broken.  This time the divergence is more significant, since the market now made a new high and has not, and more signficantly NYMO has moved down.  The divergence preceding this new formation was just a opposite movement on NYMO during an SPX retracement of its decline. 

Are the bears wishing on an inverted shooting star

Yesterday SPX was rejected at the upper level of a resistance zone.  Yesterday's inverted shooting star candle shows that the bull had control through out the day but before the close the bears increased the selling pressure and moved the market down.

Right now that is the only thing bearish about this market.  Internals still are climbing.  NYAD made another new high and the NYMO divergence was broken yesterday.

But one cavet to the bulls argument is NYMO is not in overbought territory and well as SPX Stoch.  Watch for a pull back to 1100 for the next move in the market.

Divergence in NYMO

NYMO divergence has been an accurate predictor of trend reversals.  The rally that started last week was preceded by a NYMO bullish divergence.  Now NYMO is showing bearish divergence although it is a little weak, but SPX has made a high above 1100 while NYMO has not made a new high.

The Oscillator Twins

NYSI and NYMO are two key oscillators in the market. Here are charts of NYMO and NYSI

NYSI is nearing support levels watch for a bounce in NYSI or a break.  If the market cannot move up with strong advancers NYSI should be down.  Also NYSI is only 300 points away from breaking zero which is seen as long term bearish. Also on this chart look at NYAD and SPX, NYAD has held support at 200k

NYMO

One thing to notice about NYMO is the bullish divergence.  The divergence has occurred a few times since Feb.  Although the current divergence is not as strong as it was the pervious times.