Wednesday, May 13, 2009

Stock Market Sentiment: Three 'Sell' Triggers out of Four

The NYSE Summation Index is the only breadth indicator currently supporting the rally. Even if the market was to continue down it would take 2-3 days for it to switch it to a 'Sell'.

The S&P Bullish Percents, Percentage of Stocks above 50-day MA and Percentage of Stocks above 200-day MA have all crossed below their 5-day EMAs. The chief driver of this rally from a breadth perspective has been the Percentage of Stocks above the 200-day MA, but now it has run into resistance and looks done in the short term.

The good news is that the breadth picture has changed. The bearish trend in place since 2006 has been broken. Now it's just a matter of time turning the positive developments in breadth into a sustainable, long term, rally. But in the short term it is looking a clear 'Sell'.

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