Stock Market Sends Mixed Signals Caution Warranted

Traders at work on the floor NYSE

Stock Market Signals

Price action in the stock market conflicts with several indicators we use to measure risk appetite. The indices started the week with more bullish indications but quickly faded after the Opening Range on Monday. We anticipate caution signals will continue for a while, so we are waiting for direction from institutions.

Nasdaq Bearish Engulfing

The Nasdaq-100 (NDX) signaled a reversal on Tuesday, printing a bearish outside day. We presume this could lead to rotation out of technology, so we are watching for money flow into sectors that displayed relative strength on Tuesday, namely sub-sectors like Transportation (IYT). Caution is warranted if you are trading tech stocks.

NDX-100 Stock Market

NYSE Composite Stock Market

The NYSE (NYA) Composite of 2000 stocks gives us a broad measure of market participation. The NYA pulled back to support, after testing the flat 50ma for the second time. HiLo percent is rising, sending a mixed signal. 

NYA Stock Market

NYHL New Highs – New Lows

Another measure of breadth worth watching as the number of stocks at highs or lows gyrates between a buy and sell signal. Presently we are on a buy signal, with histogram registering bars above the zero-line. The moving average turned from its low in February and continues along an upward trajectory. We’d like to see more conviction. Caution.

NYHL stock Market Signal

Junk Bonds

Junk bonds (JNK) should be monitored closely since debt usually leads the market. Presently this indicator is slightly more bearish than bullish. It would not take much to sway JNK in a bearish direction. If Junk breaks down consider puts or bearish ETF positions for the short term.

JUNK Bonds JNK Stock Market

As a side note, the 20-year (TLT) Bond is turning from its nadir and looks like it will retest its 50ma. Stay long TLT.

Futures are higher, for now.

Considering the above we are cautious until noted otherwise. Chop is very hard to trade.

Tune into to the LIVESTREAM Broadcast at 9:20 AM for more.

Happy Trading,


NYSE Composite Bullish Cycle Continues Despite the Noise

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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.