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All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The market breadth and volume are healthy and supportive of the market.  The charts below appear to show a market uptrend, not a retracement. 

NYSE new highs are holding at strong levels.  Today the NYSE new highs versus new lows were 241 to 15, and that's a healthy market.  And the general trend of new highs is up, getting stronger.  The NASDAQ isn't nearly as strong, but the numbers are still okay at 124 to 45.

The 50-day moving averages of the advance-declines for the four major exchanges are listed below.  These indicators look decent since they are moving generally sideways, and have bounced higher off the lows of early March.  Advance-declines usually peak before the peak in prices.

The NYSE bullish percent is in a very nice uptrend after bottoming in March, and these numbers are confirming the rising prices of the NYSE.  Again, the NASDAQ doesn't look as strong although still above the important 50% mark.

The NYSE OBV volume indicator has picked up and has broken above the prior levels of 2007, and heading towards the highs of last fall.  This OBV trend is also a confirmation of the of higher prices although total volume is somewhat weak and it would be a better pattern to see the OBV leading prices higher.

Now this is the kind of OBV we want to see and no surprise it is found in the leading index with the strongest relative strength.  Nothing weak in this chart.

This chart shows a nice resumption of the momentum uptrend as the MACD line in the middle of the chart changed course and is moving higher.  The only problem is that the correction didn't last long enough for the MACD to touch the lower range where it would have built a better base to spring higher.  As a result, this MACD line may touch the upper MACD range sooner where momentum will begin to slow prior to the next peak in prices.  This is a MACD technique used by John Murphy.  The traditional MACD is at the bottom of the chart and it is still showing a MACD sell signal, so the weekly momentum is actually still working against prices... something to keep in mind. 

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The chart below shows the NYSE new highs vs new lows.  The level of new highs is far below the very healthy level that existed prior to the Feb-27 sell off of equities, but with the average new highs above 100 it still indicates strength.  New lows are at a very low level consistent with the low levels that existed during most of the prior up trend in stock prices from last summer to early this year.  This also indicates market strength.  In general, the NYSE new highs and new lows index is favorable for the market.

The next chart shown below is the NASDAQ new highs/ new lows index.  It shows a trend that is weaker than the NYSE.  New highs have fallen well below the 100 level and are now in a range similar to the correction last summer.  The new lows show a bit more strength in that they are still at a reasonable level.  Since the NASDAQ has trailed the stock market for a number of years it isn't surprising to see it lag the NYSE in term of new highs and new lows.  I would rank this indicator as neutral at the moment.

The bullish percent trends for the NYSE and NASDAQ show the same pattern as the new highs/ new lows indexes.  The NYSE is showing an up trend in terms of the number of stocks on P&F buy signals, although well below the levels prior to Feb-27.  The NASDAQ is showing a weaker bullish percent trend moving sideways that looks more neutral.  However, both indexes are above the 50% level which indicates underlying strength, and both have rebounded along with prices off the lows of a couple weeks ago.  Bottom line, the NYSE and NASDAQ bullish percents are favorable for the market.

I'm a big fan of the OBV indicator because it combines the volume over a period of time and provides a view of volume that steps back from the day-to-day histogram that can get confusing... such as this past Wednesday where prices were down, and volume was up, but only by a small amount.  Do we consider Wednesday as a distribution day?  I'm not sure.  I do think though that there is strength in this market with the small and mid caps providing leadership.  The OBV is another way to see this strength in the smaller companies as the volume indicator continues towards higher levels.

One very big disappointment these past couple of weeks has been the semiconductors.  They held steady as the market sold off and showed weakness as the market strengthened.  My guess is that they will continue to trade in a contained range. 

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

This has been a strong week for the equity markets.  The markets are attempting to launch another up cycle, and we're now all on watch looking for the follow through that confirms the new trend.  The follow through means we are looking for the major indexes to have another day or two of strong price gains with solid supporting volume.

The volume this week was decent, but wasn't as supportive as it could have been leaving a mixed signal.  Regarding momentum indicators, the daily charts show good momentum signals, but the weeklies still show momentum is working against equities such as the sell signals of the weekly MACD.  Breadth indicators such as new highs/new lows are healthy.  New lows are at a level that is supportive of the market.  New highs are healthy although below the levels of the market before the Feb-27 sell off.  

Below is a chart similar to the one shown by Carl Swenlin of DecisionPoint that he published in the Stockcharts.com newsletter.  I thought it was such a good chart I decided to try it out myself and add the RSI indicator.  John Murphy has shown a number of charts similar to this one as well.  I always like these basic views of the market that filter out everything except the basic trend.  The chart shows that the best strategy in this bull market has been to be in equities and stick with them during the intermediate cycle corrections.  Carl mentioned that his strategy is to have more sensitive indicators to help him know when to be defensive during the corrections, but to stay bullish and avoid shorts as long as the 10-week is above the 40-week moving average.

The Buy/Write charts below show nice looking W base patterns along with breaks above the moving averages.  I still am a little suspicious of this market because it hasn't taken much time to build a strong base to launch the next up cycle. 

The new highs/new lows are clearly favorable for the market.  With only 10 new NYSE lows you have to be encouraged.  New highs are picking up and look healthy although still below the prior up trend levels.

The bullish percents are bouncing off their lows and trending higher with the market confirming the higher prices.  The NASDAQ looks a bit weaker than the NYSE but that has usually been the case in this bull market.  This chart along with the new highs/new lows are supportive of the market, but it is early yet.  Some sideways consolidation over the coming weeks would not be at all surprising.

The OBV of the NYSE has bounced off the lows but is not yet breaking out above the recent highs, while the OBVs of the mid and small caps indexes are looking really good.  The small companies are leading the way again. 

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The NYSE remains in a correction below the 50-day moving average used to establish the intermediate-term trend.  The up and down basing action has established short-term support at a pivot low from last November.  A close below this level would be a sign that the correction has another leg down.  A successful retest of this level would indicate a base is building for the next price cycle higher.  A very positive sign for the index is that fact that new lows remain at healthy levels even though new highs have fallen to very weak levels.  New lows are indicating that the index is on solid footing even while prices correct from overbought levels.  The weak new highs indicates that the correction is not over yet and needs more time to wash out the excesses.

Almost ditto the NASDAQ.  Prices have declined below the 50-day but are finding support as they approach the 200-day moving average.  There is also support from the November pivot low.  The price pattern looks just a bit weaker than the NYSE but considerably stronger than the NASDAQ correction that occured last summer as prices sliced right through the moving averages.  The number new lows is greater than the number of new highs, which is a clear sign of correction, but the overall levels are reasonable.

The NYSE summation index is in a clear decline, and the gap between the summation index and its 20-day ema is wide.    The recent peak in the summation far exceeded the prior peak indicating the strength of the prior up trend, so it is reasonable to expect the summation index to find a bottom at a level higher than the prior low.  However, the index looks like it needs at least several more weeks of decline to reach a low where it bottoms out and breaks above its moving average.  The upside break of the moving average from a low level has been an excellent indicator to get back into the market during the last three declines.  No guarantee it will work that well again this time, but considering how well it coincided with the prior lows, this indicator should be one of the most important to watch.

The NASDAQ summation also exceeded the prior peak, but not by the same impressive level.  This index also shows that the market needs more time to bottom out and the prior signal at the bottom for this index wasn't as clear as the NYSE.

The NYSE on balance volume is still below the moving average and continues to look weak consistent with the correction.  Hopefully this volume indicator will provide some advance warning when and if the market hits the bottom and begins the next up cycle.  So we'll be looking for a postive divergence to see if the OBV can break above its moving average and its prior recent highs while prices remain weak. 

This chart has me a little puzzled.  The OBV still hasn't even broken below its moving average.  It is showing a healthy volume trend despite the sell off in prices.  I will assume this indicates underlying strength until it breaks down.

Below is the NYSE weekly with a 40-week moving average illustrating the basic pattern of pullbacks to the moving average.  Each of the pullbacks has been an opportunity, and it isn't quite there yet.  It isn't anywhere near as easy as it looks to jump in when prices touch the moving average, but each of the last four times have worked out.  The indicator in the middle of the chart is the MACD set to show the distance of prices above or below the moving average which is a technique taught by John Murphy.  This is another view showing that when prices touch the moving average, the index finds support.  The bottom indicator is the classic, default setting for the weekly MACD, Murphy's favorite time-period and indicator.  He advocates a very basic investing technique to be long an equity bull market when the weekly MACD offers a buy signal, and to be defensive during the sell signals.  Not a bad strategy.

The weekly NASDAQ chart below is very different.  Prices have dipped quite a bit below the 40-week, and it has not been a good indicator of when to get into the market.  But the middle indicator showed when prices became too oversold last summer and equaled the selloff of 2004.  The NASDAQ declined to a low level, similar the level of 2004, and this is where support was expected... and the indicator worked.  The basic NASDAQ MACD signal has been choppy and not as clear as the NYSE either, but it has worked reasonably well.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The NYSE new lows have retreated to a level that existed prior to the sell off that started Tuesday Feb-27.  I'm not sure what to make of it except to say that it perhaps indicates some underlying strength remaining in the market.  NYSE new highs are at a low level consistent with the selloff.  So if you are a bull, the new lows are supporting your view but the new highs are not.

Notice in the chart below the selloff in NYSE prices from early May-2006 to early June-2006.  There was one strong thrust down, a retrace lasting a couple weeks bringing prices up, and then another strong thrust down roughly equal in total price to the first move down.  This is a common correction pattern.  It's unlikely this correction will play out exactly like the last one, but there is a good chance we will get something resembling a down, retrace, then down again scenario.

We should also be on the lookout for another common correction pattern which is a high, sideways consolidation forming a rectangle.  If we get this type of correction we'll see whipsaws above and below the moving average and failed breakouts and breakdowns above and below support.  It is tough to call the end of this type of correction, but when it is over it can produce a powerful resolution in one direction or the other, but most likely in the direction of the larger trend.

The first important test of this correction is already approaching as prices bounced off their lows of Monday, and have climbed higher towards the 50-day moving average.  A failure at the 50-day will confirm the short-term downtrend, and perhaps indicate a zigzag down, up, down correction pattern mentioned above.  If prices break above the moving average it will confuse the status of the market, and will certainly be favorable for the bulls, but would indicate the potential for the confusing sideways consolidation correction pattern.

The chart below shows the 20-day moving averages of the new highs/new lows which are all moving in a direction consistent with a correction, and they look like they will cross soon.  This pattern is similar to the correction last year.  Notice the NASDAQ averages didn't cross until prices were in the middle of the retrace after the first down thrust in prices.

No secret that the bullish percents have corrected lower along with the market.  But what this chart is showing is that if this correction is like the last one, then the bullish percents have a ways to go to the downside before reaching a level where they stopped last time.  In other words, prices could still correct quite a bit before the longer term uptrend resumes.

The advance-decline line below provides an interesting longer-term view of the market.  The AD line certainly held up nicely in the most recent intermediate cycle.  Last spring the AD line produced a negative divergence with prices well before the final price sell off.  This time we see the opposite as the AD line lags the move lower in prices.  This looks like more evidence of underlying strength in the market similar to the correction in the fall of 2005.  But I'm not reading too much into this yet.  First, I haven't had great experiences using the AD as a market indicator, and, second, I think the current correction needs more time to reveal how it is going to play out.  I'm still afraid that this market is trying to suck us back in and then hit us with another sharp move lower.

The red line in the charts below show the On Balance Volume (OBV) for the NASDAQ and NYSE, and the 50-day moving of the OBV.  The blue area in the background is the price index, and the daily volume is the histogram at the bottom.  What a contrast in the OBV pattern of the two exchanges.  The NYSE OBV showed a really obvious distribution pattern well before the Feb-27 sell off, while the NASDAQ OBV continued strong, and still looks healthy.  At the moment, these charts are hinting at greater underlying strength in the NASDAQ.  That may change in the weeks ahead and it'll be something to watch as the correction is given time to wash out a lot of the investor bullishness and then form a base for the next cycle to begin.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

The NYSE looks healthy based on prices hitting new highs, but the OBV peaked out in December.  This is not the index receiving a lot of new investment money at the moment.

The NASDAQ finally joined the new-high party, and the OBV has followed along.  Volume is confirming the price highs and this looks healthy, or at least better than the NYSE at the moment.

This is by far the chart of the week.  The SOX finally breaking this down trend line.  Now it just needs to break above the near term resistance set in November and December.  With the SOX participating in the rally, and funds flowing from the NYSE to the NASDAQ, the market may be able to extend.  But don't forget how overbought the market is... there is a lot of risk as well.

More confirmation of the price highs from the percent of stocks above the 200-day moving average.  This index is now near the prior high of last spring, but as you can see from last spring, it can stay at this level for a while.

Below are the new highs, new lows.  The ratio is very favorable.  On the NYSE, a 20-day moving average of 265 highs vs 12, and on the NASDAQ, a 20-day moving average of 148 to 29.  This is the major chart to watch to view the underlying market health, and right now it continues to look healthy.

This buy/write index is showing perhaps a little weakness in the Dow, but again the NASDAQ is looking fine and leading the others.

Sorry, the charts are out of order here.  Another way of viewing new highs, new lows.  You see last April, the new lows started to rise significantly in advance of the eventual market sell off.  A similar pattern may develop with this cycle as well but no indication of it yet.

More evidence that money is flowing into the NASDAQ.  Probably because there is so much more room for the NASDAQ to advance from here.  62% of NASDAQ stocks on a P&F buy signal is not yet overbought.