Market Sentiment: Bearish with Buts

Intermediate market breadth indicators have favoured selling pressure since the start of May and this situation looks destined to continue for probably the rest of the summer. Yesterday saw a possible bearish head-and-shoulder breakdown in the Nasdaq Bullish Percents which adds to the bearish side momentum

However, all of this ignores the huge leap made in the Percentage of Stocks trading above their 200-day MA - an important long term bullish marker. So far, the recent decline hasn't impacted on stocks trading above this key moving average.

With the summer not renowned for its big moves in either direction don't be surprised if the latter part of the year provides an excellent buying opportunity if stocks are able to hold the higher regions of their March-June advance (i.e. stick above their 200-day MA).

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.

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