The NYSE is beginning to indicate some signs divergence. The number of declining stocks is outnumbering advancing issues. Are we headed higher or lower?
Breadth Divergence
A close in the red zone alerts us to a potential change of character. While this is but one indicator, we do utilize this information in addition to sentiment to derive a thesis for the short term.
SPY Daily
SPY price action reflected buyers in the Wednesday evening session. The close nearly managed to finish above the 9ema during the regular session. Pre-market blocks are few. Trading is above the 9ema (255.29) at this writing, hovering at 256.00 (+/-).
Institutional sentiment can be monitored by watching the number of stocks being bought on an uptick versus the number being sold on the downtick. The lower panel in the chart above has been crossing intraday, over the past couple of sessions, so we need to keep an eye on this as earnings continue to affect the current mood.
If nothing changes, we will continue to scale out of positions in the short-term, as rotation seems to be more towards financial stocks. Watch the banks. If we lose the financials, we would assume a top is in. Should the banks continue performing as they are, we will assume rotation and continue monitoring breadth.
ECB rates remain unchanged.
AMZN, GOOGL, MSFT, and INTC report after the close.
Happy Thursday,
Vinny