Saturday, May 9, 2015

Stop-Start Market

The Market Trend Model ( moved to a neutral bias on Friday when the market indexes spiked up sharply as the bi-polar stop/start environment does its very best to frustrate both bulls and bears.  However, internal market indicators continue to show caution is warranted as the market indexes failed to make new 52-week highs after peaking in late April.

The end of week rally pushed the major indexes back to their most recent areas of resistance from the prior breakout/breakdown price levels in April.  Despite the wild gap up price action on Friday, the major indexes have printed a series of lower highs and lower lows during the last two weeks.  Whether the Friday price action is a retest of the previous breakdown or a resumption of the prior breakout should be revealed in short order next week.

Of particular note, the Nasdaq high-low index ( moved to a negative bias on Friday suggesting lower prices are on the horizon.  This indicator last moved to negative at the beginning of December 2014 and the Nasdaq remained in a choppy sideways pattern for nearly three months.

The NYSE advance-decline volume ( spiked Friday to its highest level since September 2009.  After a prolonged six year stock market advance, the advance-decline volume action on Friday may be an exhaustion type move.  Additionally, the daily and weekly summation index readings continue to show a negative bias for both the Nasdaq and the NYSE.

In the end analysis it is price that matters most.  Should the market indexes move higher through the recent resistance areas, then higher prices likely will beget higher prices.  Always remain mindful of all possibilities and expect the unexpected.