Following Wednesday’s reversal from all-time highs, yesterday the SPX was dead flat—at least on the surface.
Below “the market”, the turbulence was undeniable as more than a few tech glamours got knee-capped.
And what was most pernicious about their drops was that they opened more or less flat and then buckled dramatically.
Names include:
1) SNDK gapped up to an all-time high only to skid 50 points.
2) COHR knifed down out of a Cup and Handle
3) WDC erased all of Tuesday’s explosive breakout
4) Ditto STX
5) MDB shed 25 points from an all-time high after carving out a Megaphone Top
6) CIEN skidded 33 points after closing at a record high on Wednesday
The above look like this week will mark Buying Climaxes.
These are techs that were hovering at all time highs but Mr. Market was an equal opportunity employer as many techs that looked flushed out also got a can of whoop-ass opened on them on Thursday.
DDOG, ZS and AMD looked like they had made the turn this week but sank back to their swing lows.
AMD turned its 3 Day Chart up on Monday but left an Expansion Pivot sell signal (50 dma) squandering 30 points this week from 235 to 205 (so far( in a great example of OpEx Pinball.
It’s sitting on a 3 point Bottoms Line and breakage opens the door to 200 or lower.
Thursday delivered a standoff across major bellweathers and benchmarks.
If it’s a bull market, bellweather’s AAPL and NVDA are making it hard to tell.
None of the key indexes, the DJIA, SPX or NAZ or the MAGS were able to extend beyond their respective highs established earlier this week leaving market to mark time rather than advance.
The collective failure to build upon the momentum early this week looks technically significant.
At this stage of a mature cycle, leadership should be expanding and confirming strength.
Instead, we continue to see hesitation, non-confirmation and an inability to attract follow through buying at or above recent highs.
WHEN MULTIPLE BENCHMARKS STALL SIMULTANEIOUSLY, IT OFTEN REFLECTS EXHAUSTION rather than consolidation.
More troubling is what is occurring beneath the surface: the 50 day average of new 12 month lows on the NAZ remains at its highest level in the past six months.
In sum, this condition is inconsistent with a healthy bull market advance. Historically, elevated and persistent new-low activity during periods of index strength has tended to precede broader market rollovers rather than renewed upside.
Internal damage continues to accumulate even as prices attempt to hold near the highs underscoring the axiom that “it’s a market of stocks, not a stock market.”
If you look just at the SPX or NAZ things look honky dory.
If you’re in the glamours you’re taking gas.
Thursday’s action did nothing to repair the technical fractures that have been developing for weeks.
Leadership remains narrow, upside momentum is fading, and internal pressure continues to build.
This is the type of market behavior that often marks the transition from late-cycle topping into the early stages of a bear…rather than a brief pullback within an ongoing bull.