Current breadth picture

The breadth data has deteriorated some lately.  Check out the McClellan oscillator.

We had a brief cross below the zero line before the upside move on Friday.  A down day will easily turn this back negative again.  Here is the 10 DMA breadth chart.

This chart is getting close to a crossover as well.  The next two days that will drop off were strongly bullish, so a negative day can easily cause a crossover on this chart.  Notice the 10 DMA of volume in the bottom section has already crossed over.  This may be a warning sign.  However, there is one more chart that I have not shown on the blog yet that really gave me pause when I saw it.  Here is a 10 DMA chart of just the S&P 500 breadth and volume.

Hmm, this chart has negative crossovers on both breadth and volume.  This looks pretty bearish for the market to me in the short term.  If price turns back down before we get a positive crossover we could be starting a move to retest the 6/4 low.

Here is the summation index.

The summation index has flattened out.  We have worked off the over sold condition we had at the June low. Notice the difference from last Sept.  The index never got out of the oversold condition.  However, the index had a positive divergence at  the Oct. retest.  From the current position we should have a positive divergence if we retest the June low.  However, this much strength indicates a lot of people piled in long.  There is a risk they panic out and the June low doesn't hold.  We will just have to see how things look if we get down there.

If the market cannot break above the current resistance soon it is likely to turn down.  The breadth would confirm the down move this time.  That could add significant selling pressure.

Bob