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Strategies & Market Trends : Effective Collaboration - Team Research for Better Returns:
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To: The Ox who wrote (3674)9/25/2014 12:44:35 PM
From: Return to Sender1 Recommendation

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The Ox

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I'm more of a reader of market breadth, technical analysis and sentiment analysis than one who looks to assign reasons for why the market goes up or down.

All I know is that when I look at these charts I see a lot of weakness recently even as new highs were being hit by a lot of major market indexes:





Long Term Market Breadth Indicators for the SOX and market as a whole. Crossing over the green horizontal lines are indicative of oversold conditions that could lead to a rally. Crossing over the red lines is indicative of overbought conditions that could lead to a sell off. In either case the market might recover from these conditions only to head further into oversold or overbought territory. It is therefore important to look for positive or negative divergences. Positive divergences were seen at the last major market bottom in October 2002 where most market breath indicators had improved readings than those seen at the previous bottoms even though the market was actually much lower.



























































If we are going yet higher soon then a bottom should form pretty quickly in the next few days. The problem is that the overall market is not showing a great deal of strength. It's just a few stocks doing the heavy lifting. Fewer all the time masking that weakness.

This cannot continue forever. Small caps have to participate to keep the rally intact. If they do not then the overall market will be dragged down as well. Then of course reasons yet to be assigned will come out.

But weak market breadth leaves the market vulnerable to a bigger fall regardless of the assigned reasons.

RtS
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