Stock Bulls are Running Out of Time

Today 04/14/21 two of the three main US stock indices, S&P 500 (SPX) and the Dow Jones Industrial Average (DJI)  made new all-time highs.  This is a bullish “Rule of the majority” signal. Additionally, the VIX indicator made a new low in its decline from its high made in March 2020.  These factors are at least short-term bullish and imply at least one of the three main US stock indices could make new all-time high in the next  few days of weeks. 

Today was also two trading days after a new moon.  My 04/11/21 blog “Target of Opportunity” noted  that markets sometimes have turns within two trading days plus or minus new/full moons.

On the surface it could appear the rally since late March 2021 is unstoppable. Underneath the surface is a different message.

The daily NYSE new – 52 -week highs ($NYHGH)  courtesy of Stockcharts.com illustrates what’s been happening since the start of 2021.

Not only is there a bearish divergence from the March 2021 high, there’s also a double bearish divergence happening during the powerful April price rally.

The daily Nasdaq new – 52 – week highs ($NAHGH) has an even more bearish message.

The Nasdaq Composite (IXIC) is the only main US stock index that today failed to make a new all-time high. From March 2020 to  February 2021 IXIC was the strongest of the main three indices.  Since it all-time high in February 2021 it’s been the weakest.

$NAHGH has a double bearish divergence since February 2021 and has a single bearish divergence during the March to April rally.

Many stocks within the Nasdaq Composite are already in a bear market.

This internal weakness is occurring on the cusp of a seasonal bearish period for US stocks. Since the secular bull market in the US stock market began in 2009, there have been  five instances in which either a multi-month or multi – week declines began in April/May.

These are the years: 2010, 2011, 2012, 2013, 2015, and 2019.

There could still be more upside action for US stocks. The time frame could be weeks or maybe just a few days.  Stock bulls are running out of time.