Wednesday Market Momentum Breadth Volume
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New highs /new lows are my goto indicator and they have been terrible. There have been a couple brief periods where new lows settled down to around 50 or less per day, but other than that the new lows indicate a market in a correction since late October. Stocks are now short-term oversold again so we may see some buying soon, but unless these new lows trend down and stay down, any rallies are probably just countertrend bounces.
Price levels just above the 80-week has been the line in the sand for NYSE stocks. Buying at these levels has been rewarded in the past. Of course, the market is different now and under enormous stress. Still, the bad news has been relentless and the selling brutal, and at some point that becomes fully reflected in stock prices.
Prices near the 40-week has been support for the NASDAQ for about a year. So now the market is oversold and at support, and usually that means a low-risk opportunity using tight stops. I'm not sure that is true this time and getting into the market in front of a bounce may not work this time, or may not be worth the risk. TBill rates plunged again today, and II sentiment was very bullish which works against higher prices, and new lows are elevated. Before putting much money back into the market, I'm waiting for these conditions to be more favorable.
Arthur Hill's column today noted the weakness in the NDX similar to our post last Saturday. The bullish percent has broken below support to confirm the downtrend and the very poor NDX breadth. The rally to 2142 looks like it fits very nicely as a fib retrace and a lower high in a weak trend.
