May 6 Collapsing Stock Market Update and Big Trender Stock Scan

May 6, 2015: 1:42 PM CST

After an overnight bounce off daily support, sellers again dominated the market today, resulting in yet another impulsive Trend Day lower with support breaking.

Here’s our Extended T3 Trend Day down for reference:

Here’s a snippet from Tuesday evening’s Member Strategy Report that forecast today’s rally:

Let’s state the facts – we’re back at new highs into the underside of 2,120 with WEAK volume and WEAK momentum in a WEAK rising/bullish trend.

As the IWM (Russell 2000 ETF) – and S&P 500 – pushed to new all time highs in April, FEWER stocks (in the S&P 500) were making new highs.

As stocks made new all-time highs, roughly 30 S&P 500 stocks shared in the parade to new highs.

In late 2014 the number was over 100 and in early 2015 (February’s rally) the number was clustered near 70.

Also, volume has been weak in 2015 and stronger on sell days which is just more evidence that the market is poised to fall further

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Trend Days in the market occur when both sides of the market are doing the same thing – for different reasons.

In this case, sellers (with the odds in their favor as support into 2,090 shattered) became aggressive into resistance and short-sold repeatedly today.

The result is another one-direction sell-swing market which was our expected/logical/dominant thesis last night.

Initial logic favored a bounce up off the 2,090 level but when real-time action resulted in a breakdown, the market again opened an aggressive sell-swing pathway lower, nearly repeating yesterday’s action.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

Yesterday’s Breadth Chart saw a huge bearish confirmation.

Today’s chart is not quite so bearish, given that three sectors (Materials, Energy, Staples) are at or near the 40% Breadth level (still not impressive but better than yesterday’s reading of zero).

No stocks in the Utilities sector are positive and 10% of Financial Sector stocks are positive right now.

Nevertheless, there are additional tiny pockets of strength, unlike yesterday.

Still, if you can’t fight the urge to find the rare diamond in the pile of bearish stocks, fight the odds with these:

Walker and Dunlop (WD), Herbalife (HLF), Assurant (AIZ), and Agrium (AGU)

Bearish downtrending candidates include the following stocks from our “weakness” scan:

Alexion (ALXN), Fossil (FOSL), Vitamin Shoppe (VSI), and Allstate (ALL)

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Corey Rosenbloom, CMT
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One Response to “May 6 Collapsing Stock Market Update and Big Trender Stock Scan”

  1. Relief Rally Market Update and Big Stock Scan May 7 | Afraid to Blog Says:

    […] sure to visit yesterday’s mid-day update where we were seeing key pockets of strength in Breadth which signaled “not so bearish” […]