Momentum Continues to Deteriorate

As the S&P 500 (SPX)  and Nasdaq Composite (IXIC)  continue to climb, internal momentum indicators are becoming more bearish. 

The 06/29/21 blog “Historical Perspective of Stock Market Momentum” illustrated the Bullish Percentage Index for the SPX ($BPSPX).  The daily $BPSPX chart courtesy of StockCharts.com shows the activity as of 07/09/21.

On 07/08/21 $BPSPX made a new near-term low. The SPX rally on 07/09/21 has brought $BPSPX back to the bottom made on 06/21/21, a shocking near and longer-term bearish divergence.

For several years, the NYSE – Advance/Decline line has confirmed price action. Divergences are rare and small, spanning only a few days.  What’s happened this year with the IXIC – Advanced/Decline line ($NAAD) is more traditional action.

The daily $NAAD chart illustrates the bearish divergence.

On 07/09/21 IXIC made a new all-time closing high yet $NAAD was significantly below the bearish divergence made at the June high.

The daily chart of NYSE New- 52 – Week Highs ($NYHGH) illustrates action up to 07/09/21.

Another shocking bearish divergence. The next blog will focus on external momentum indicators

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

5 thoughts on “Momentum Continues to Deteriorate

  1. This is a “valuable internal information + bearish market perspective.

    Notably,you often “see” things that other’s simply miss,
    although it’s right there in front of their eyes as well.

    Thank you
    I look forward to each and every article published.

    Like

  2. That’s an interesting post. I am also considering the advance decline line when looking at the health of a stock market index. Do you think it makes a difference to view only ADV DECL for the members of an index or to view ADV DECL for the whole market (e.g. the NYSE)?

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  3. l look at the NYSE – A/D – $NYAD, SPX – A/D -$SPXADP, and Nasdaq Composite – A/D – $NAAD. The symbols are used on StockCharts.com you can get an A/D line by going to the cumulative setting. SPX and Nasdaq Composites mostly confirm price action, any bearish divergences have been rare and brief – only a few trading days. The Nasdaq A/D line which I’ve illustrated in my posts this year has given a more traditional bearish divergence signal – spanning several weeks. Mark

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    1. Thanks for providing your thoughts, Mark. I sometimes worry about too many small “hip” tech stocks distorting Nasdaq ADV/DECL data, but maybe that’s something which is not happening too often.

      Like

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