US Stock Market Momentum and Sentiment 04-29-22               

On 04/29/22 the US Stock market represented by the three main stock indices; S&P 500 (SPX), Dow Jones Industrial Average (DJI), and Nasdaq Composite (IXIC) wiped out a powerful rally made on 04/28/22.  Could this be  the start of a crash?  Perhaps, anything is  possible.  However, a review of momentum and sentiment readings  for US stocks on 04/29/22 reveal some fascinating  clues.

The daily SPX,DJI, and IXIC chart courtesy of Trading View updates the price action  of these indices that was illustrated in the 04/28/22 blog “Examination of the Weakest US Stock Index”.

So far the IXIC  is  still the only index of the three  to make a new 2022 decline low.  I call this a “Rule of the majority” signal – in  this  case the two non-confirming indices are  bullish divergences.  

The daily Nasdaq  New – 52 – Week Lows chart ($NALOW) courtesy of StockCharts.com illustrates incredible data.

As the Nasdaq goes lower, there are less stocks making new – 52 – week lows.  This phenomenon continued into  04/29/22 with less new lows than were recorded at the 04/27/22 bottom.

The chart  for NYSE New -52 – week Lows ($NYLOW) confirm the Nasdaq readings.

But wait – there’s more.

The daily Nasdaq 100 – Bullish Percent Index chart ($BPNDX) shows  intermediate and short-term bullish divergences.

The daily SPX – Bullish Percent  Index chart ($BPSPX)  has a  similar message.

On 04/29/22 $BPSPX went marginally below its 04/27/22 reading . However, there’s  a significant double bullish divergence vs. the readings made on 02/24/22 and 03/14/22.

There’s also a powerful signal coming from the Sentiment dimension.

The daily CBOE Options Total Put/Call Ratio Index chart ($CPC) is fascinating.

This chart records  the Put/Call ratio at the end of end trading session. High readings  mean more Put options are being purchase vs. Call options.  This is  a contrary indicator – relatively high Put/Call readings signal markets could be at or near a significant bottom.

The $CPC – 04/29/22 reading was  the highest since  the crash bottom in  March of 2020!

Traders  panicking while less stocks are making new- 52 – week lows is  not what you would expect if a stock market were on the verge of a crash.

Traders  entered a  50% long position on SPX non-leveraged related funds at the open of trading 04/29/22.  The opening price was 4253.75, stop loss for half of the position was a move below 4188.67.  This  was a price  decrease of 1.5% the loss of half of a 50% position was about four tenths of one percent or .40%. Continue holding  long the remaining  position.

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.

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