Tuesday, April 21, 2009

Market Sentiment: Breadth Weakens But Not Broken

Not surprisingly there was a negative shift in market breadth but it will take more than a day of selling for them to truly reverse course (although the likelihood is very high given their overbought status). Most sensitive was the Percentage of Stocks above the 50-day MA which gave a clear 'sell' in the indicator and in supporting technicals - MACD in particular.

The Summation Index could move into the 500s before topping out - unlikely, but needs to be considered.

Bullish Percents wobbled but are the least overbought given the aforementioned have breached what had been bear market resistance up to now and the Bullish Percents have only just got there.

Given further weakness is likely, the next question is where will breadth support kick in and at what point will the Nasdaq be when it does?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.