Weekend Analysis for Sunday 7/5/20

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Below is an excerpt from our in-depth weekend analysis for members.

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Updates 2:34 PM EST - Sunday 7/5/20

​Long Term Portfolio and Medium Term Trades
The main message from $SPX $NDX IWM is this.   

• Buy-the-dip buyers are buying mostly $NDX stocks.   
• Of those $NDX stocks, they are limiting their buying to a narrow list.   
• The enthusiasm for $SPX and IWM is low.  $SPX and IWM have formed a lethargic Bounce8.  Any time they manage to rise up a bit, they are met with sellers.

This does not bode well for the continued strength of the bear market rally.   But it will take some transition time before Dive2 arrives.   The key date to monitor for the near future is FOMC announcement on July 31. 

Let's drill down into the signals.

Market Internals
The overall message from market internals is that there is a bearish divergence brewing for multiple indicators.

Market breadth:
Bounce8 started on 6/29, and between 6/29 and 7/2, NYSE and Nasdaq stocks have been having mostly net advancing days.   However, even though this is the case, the cumulative readings for NYSE and Nasdaq A/D are down.  This is a bearish divergence.

Additionally, Nasdaq stocks are exhibiting the bearish divergence patterns that showed up before between August and October 2018, and January and February this year.

Percentage of stocks above their 200-day MA:

• During the week of 6/8, Nasdaq percentage got up to a very high 86%.  This past week, it registered a high of 74%.  Still bullish but not as bullish.

 

• During the week of 6/8, NYSE percentage got up to 49%.  This past week, it registered a high of 30%.   This is a worrisome number given how high $SPX IWM have climbed back up since the March low.

Equity put/call ratio:
This ratio is in neutral territory right now, so it is hard to call.

Volume:

• Volumes have been dropping for both $SPX and $NDX.   The only the days when they pick up substantially are sell days.   
• The last time buyers were enthusiastic about IWM was 6/11.  Since then volume has been dropping steadily. 

The rest of this post covers 
Volatility
Short Term Support & Resistance Zones
5-minute Chart Thrust Counts​
Important Hourly Chart Patterns
Short Term Trade Setups

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