By Liz DeMera
A Summation Index that is going upward is bullish for the market as can be seen below in the first chart, unless of course the market decides to take another turn.
The summation bar chart (second chart) is showing a possibility of becoming very overbought if Monday is up again.
So, at this point the NYSE Summation now requires -2616 advancers just to halt the upward momentum of the Summation Index chart. It was quite the reverse in Mid-November when we were needing over +4500 advancers just to halt the Summation slide. My most immediate concern is when I look at the NYSE 10 Day and 30 Day Moving Average Advancer/Decliner Chart. See more thoughts below.
Concerning for many reasons as you take a close look at that spike up (third chart) on the blue line (10 day MA) that is one big spike, so the market is clearly reaching a short term overbought situation. However, if you look closely at the red line (30 Day) its reading as intermediate oversold.
So, we have a tug of war going on here. We’re short term overbought, but intermediate oversold. So, this is what makes this a turning point in the market, very tough to put on a swing short position when you see the red line low as it has a tendency to climb higher up, before the market is exhausted. You can see that the 30 Day is not this low very often. Now if the red line had gone up to lets says the +400 area and was rolling over it would set the market up as a short and your summation were rolling over with it, you would then have a market that is clearly losing momentum. We don’t quite have that set up now.
This market has the tendency to defy everyone, so it’s anyone’s guess as to what will happen next. At this point I’m more comfortable just watching instead of trying to guess it as the risk/reward is no longer there.
The last chart below is something to watch carefully as the BKX:SPX ratio is starting to decline. Lower highs are bearish and something to definitely keep eye on.
This was written by @lizdemera , who uses market technicals, and sentiment indicators to determine future stock market moves.