Wednesday, August 20, 2008

Nasdaq Breadth Indicators looking soft

The Nasdaq Bullish Percent indicator has again in the process of rolling over around the 42% mark; off typcial bear market tops around 50% and well off bull market tops where 70% of Nasdaq component stocks enjoy point-n-buy signals. To have the index rise at much as it has with only 42% of component stocks on 'buy' signals is not the kind of form strong rallies are made of.

The area to look for a bullish divergence between the breadth indicator and the parent index; the Nasdaq undercuts July lows but the bullish percents stay above the 25% mark.

The percentage of stocks above the 50-day MA shows similar struggles as it bumps into the 60% resistance area. Ultimate Oscillator switches to a 'sell' signal.

The Summation Index always gives the smoothest signals. It too has come up against May high resistance and is still some 250 points off bear market top territory. Technicals still strong (particularly the MACD).

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website