Market Breadth Update Then and Now Jan 21
What’s Breadth suggesting about the current market? And how was it extremely helpful in calling the recent top?
Let’s take a look!
First, what we’re seeing is the S&P 500 Weekly Chart with a specific Breadth Indicator.
We’re noting stocks at New 52-Week Highs (Blue), New 52-Week Lows (Red) and the Difference (Lower Panel).
Breadth is helpful to determine whether a Trend in motion is likely to Continue or Reverse.
Namely, when Breadth (stocks making new 52-week highs) consistently INCREASES with price going up, odds favor the continuity of the trend into the near future.
I highlighted two periods of Breadth Strength with Price Strength… and yes stocks continued higher.
However, the three Red Arrows on the New 52-Week High panel also showed negative divergences.
Price continued trading higher while fewer stocks were making fresh 52-Week Highs – locking in a divergence.
Ultimately the market fell sharply in all three examples (mid-2011, mid-2014, and mid-2015).
During those times, many more stocks made fresh new 52-Week Lows as labeled.
At this point we continue to see weakness in Breadth along with weakness in price – not a bearish sign.
Compare the index with this indicator and use the current readings to give us clues to the future.
You can see recent updates from prior days:
January 20: “Targets Hit Instantly Today”
January 19: “Daily Pivot Planning Levels”
January 15: “Weekly Planning (Distribution Arc)”
January 7: “Distribution Arc Trendlines and Updated Targets”
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
!!!! It is extremely helpful for me. Thank you for
taking the time to discuss this, I feel strongly about it and love learning
more on this topic. If possible, as you gain expertise, would you mind updating
your blog with more information? !!!!
Stock Cash Tips
It is very confusing to think about much at present, as market is pretty mixed, so I would rather want to wait in this then to jump on the train. I am lucky enough to be with OctaFX broker, it is a type of company that we can get serious help from through their daily market news and analysis service, it is very cool and helps a lot with trading, so that is why I love it so very much.