S&P 500 Index (SP500)

[DiscoverGold]

Trading Notes: Wednesday, January 13th
By Brett Steenbarger, Ph.D.

* January 13, 2016

* Tuesday was the first day in which we saw the number of stocks making fresh new lows decline day over day. To this point, it has been quite a broad decline, with fewer than 10% of SPX stocks trading above their 50-day moving averages and only about a quarter of the stocks trading above their 200-day moving averages. Indeed, yesterday was the first day in nearly two weeks in which we've seen more than half of stocks closing above their 3-day moving averages. That is unusually consistent weakness and is but one of the things leading me to believe that this is more than a mere correction in a bull market.

* Below is a breadth measure I keep for SPX stocks, capturing the percentages closing above short-term moving averages (data from Index Indicators). We can see that we have stayed oversold far longer than is usual in a normal correction.



* Yet another look at market weakness is a running total of buy vs. sell signals for all NYSE stocks across various technical measures, such as Bollinger Bands (data from Stock Charts). The quality of the bounce we can muster from these oversold levels will tell us a lot about whether this is part of a multi-year range or a first leg in a larger bear market move. My cycle measures are at lower levels than we have seen during recent corrective moves, which once again opens my thinking to the possibility that we are in a different regime, not the rangy corrective mode of much of 2014 and 2015.



http://traderfeed.blogspot.com/2016/01/trading-notes-week-of-january-11-2016.html

• George.

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