I thought coming into the week we would see at least a short-term high by Tuesday. That was clearly wrong. However, I did point out that there was nothing from an Auction Market perspective as far as potential “resistance” until considerably higher. We are there, now.
Practically the entire drop in the NDX and SPX that began on Thursday, August 1 has been retraced in dramatic fashion in rapid time. This is the most vertical stretch of trading to the upside since the kick-off late last October, at least in the SPX and NDX.
Both the NDX and SPX are near important upside levels from an Auction Market perspective, and the SPX is only 2.2% away from another all-time high. The NDX is a bit more than 6% from today’s print high to a new all-time high.
Thursday saw another large gap and run trade in all four of the indices as panic bid ruled the day into the close.
There is mounting evidence of at least a short-term top, and possibly a significant one.
The New York Composite (NYA) is a broad index of all stocks listed on the NYSE. Below the chart is NYSE breadth data. The NYA is only .57% from a new all-time high and we can see how the NYSE 10-day MA of advancing issues is not confirming. The 5-day MA of NYSE advancing issues is also diverging. Divergences can persist for a long time, and they can resolve bullishly, but when we see some US indices trade to new all-time highs and other not it is ALWAYS a heads-up.
Below is a 30m chart of the SPX and breadth. The price/breadth relationship has not been consistently helpful but observational experience suggests at least a pause in accumulation is becoming overdue that could coincide with some price retracement. This is also occurring as the SPX is approaching an obvious Auction Market KRA.
The NDX has almost retraced the entire 12% “crash” of a couple of weeks ago. It is at the lower cusp of a KRA that has the potential to slow the trend.
The DOW is less than 2% from a new all time high.
The RUT is not far from a level that would close the gap from 8/2.
