Could the market be sucking in the bulls here?
Typically in market rallies, you’ll see the number of period specific highs (5, 10, 20, 65 days) expand on each move higher for the market and big indexes. Quality stocks of companies with quality earnings (whatever that is) are driving the market higher. You run into trouble when the number of those highs begins decreasing on each higher move of the market. The charts are running the last spurt of the 100 yard dash, but the internals are waving a red flag. We’ve hit that point the past two weeks. They’ve been running the junk. CROX is a good example.
For the SPX 500, (5, 10, 20, 65 days) April 9 had 310, 282, 262, 76 highs. April 24 shows a drop to 208, 178, 165, 129 highs, with the 65-day period increasing.
For the Nasdaq 100, (5, 10, 20, 65 days) on April 9th had 58, 54, 51, 31 highs. April 24th shows a drop to 44, 36, 31, 30 highs.
The 200dma should stall the NDX.
Yesterday, I posted a chart of the SPX weekly making a new lower-low candle, signifying weakening of the bulls. That doesn’t mean they won’t take out the 875 pivot high, and pull some stops first. SPX 880 is still in that channel.
The “right” way to play the market the last seven weeks has been to buy the dips. That will keep working until it doesn’t. Just as shorting the move down in February was working for the Bears. Learning to recognize what is working and trading with it will make you the money.
