Health of the Market
The indicators for the longer term equity market show an up market within a bull cycle. The S&P 500 on Friday closed only 0.60% below a record close. The momentum of the large-cap stocks is driving the market higher, although the small-caps powered higher on Thursday and Friday. The S&P 500 is up 15.2% YTD. 75.0% of S&P 500 stocks were above their 200-day exponential moving averages, up from 73.2% the week before. 64.6% of these stocks are above their 50-day EMAs, up from 62.2% the week before.
[NC] The market in the typical month of November is usually very
good. The charts for the first year
of the presidential cycle compared to all years show this. We are
in the Power
Zone, the favorable time of the year. Access more data on the best six months here. A Bull Equity
Cycle was confirmed as of 3/18/2016. The
long-term BullHeal System
went to a buy on
9/27/2017. The equity market tends to move on margin
debt. See chart
The S&P 500 large-cap index, represented by the SPY exchange-traded fund (ETF) in the chart, has been flat for a week or so. This may continue during the low-volume Thanksgiving week. The ETF is up 5.8% in the five months since 6/15/2017 shown below. The Dow Jones Industrials is up 9.2% during the that time.
The Russell 2000 small-cap index, represented by the IWM ETF in the chart, broke above the support level shown on high volume on 9/27, which was declared the start of the Power Zone. It is up 5.6% during the time shown. It powered up 1.94% on Thursday and Friday and is now above its 50-day MA. The purple support zone has held since December 2016.
The technology-heavy Nasdaq composite index is represented by its 100 largest stocks in QQQ. This ETF is up 10.7% since 6/15/2017 as shown. However, 50.7% of Nasdaq stocks are below their 50-day moving averages. This is a sign that the market is weak, and is held up by the large-cap stocks.
[NC] Below is the Russell 2000 small-cap index that tends to lead the overall market both up and down -- as the small-cap stocks are generally more risky than large cap stocks. This index is shown with high-low-close bars. It's 50 and 200-day simple moving averages are included. The 200-day moving average often acts as support or resistance to price movement as many traders watch it.
[NC] The Health Alert is based on the momentum of the small-cap Russell 2000 index, the Nasdaq breadth data, and the Nasdaq 52-week new highs and new lows. The thresholds are described below. The green buy and red sell 'alert' poles on the chart show when these alerts have occurred.
A Health Sell Alert occurred on Thursday 11/9. This sell alert is shown by the red pole. A Buy Alert will occur if the Nasdaq Summation Index crosses up through its 5-day EMA. The small cap stocks tend to lead the market.
[NC] The second pane is the Relative Strength Indicator (RSI) for the Russell index, a measure of momentum of the market. This is the relative strength of the Russell 2000 itself -- it's not relative to any other index. Above 50 shows positive momentum over the last 21 days. The latest plot can be seen by clicking here. The green arrows indicate a positive change in momentum as the RSI crosses above 50; red arrows indicate downward momentum when the RSI crosses 49. The threshold of 49 is used to give a more definite indication of the start of a down-swing.
[NC] The third pane is the Nasdaq McClellan Summation Index,
$NASI, (red) and it's 5-day exponential MA (blue). This is a running
sum of the difference of two moving averages of the number of
advancing issues minus the number of declining
issues. A 19-day and a 39-day exponential moving average (EMA)
are used. This shows whether a market move is broad based. As the trend
changes, the red index will cross the blue EMA and an arrow will
be drawn. This indicator must be consistent with the RSI before an
alert pole is drawn on the price chart. When this index is below the 5-day EMA, and a 'sell alert'
has not occurred, this is a warning not to purchase new positions,
but to HOLD those that were bought earlier on the 'buy alert'.
AmiBroker software with Yahoo data is used for the charts with black background. The source of the other charts is located on the upper right of the chart. This page is for amusement only, and should not be taken as advice to buy or sell anything.