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Stock Market Internals Not Confirming Rally (video)

This video covers an unusual disparity between the gains in the Nasdaq 100 & the S&P 500 today relative to the number of advancing vs. declining issues.

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2017-10-27T10:50:30+00:00Oct 27, 2017 10:50am|Categories: Equity Market Analysis|Tags: , , , , , |4 Comments

4 Comments

  1. rsotc October 27, 2017 11:02 am at 11:02 am

    4 of the 11 sectors within the S&P 500 are trading in the red today with 2-3 trading nearly flat. Almost all of the 0.5% gain being attributed to technology, which is the largest weighted sector at 23.2% (XLK, tech ETF, is up 2.15%).

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    • joefriday October 27, 2017 11:36 am at 11:36 am

      Good stuff randy…

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  2. jacant October 27, 2017 12:29 pm at 12:29 pm

    Thanks Randy, of note in the video that you didn’t specifically mention is the -divergence in the first part of May that culminated with a Gap down followed through with a wide range down bar! Nice Heads up!

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    • rsotc October 27, 2017 1:43 pm at 1:43 pm

      I didn’t mention that but now that you bring it up, check out the price action leading up to that massive red candle on June 9th. Most notably, look at that big green candle just 5 sessions earlier which was an impulsive breakout & gap up to new highs.. not unlike today. I would be surprised, but not shocked, if QQQ builds on today’s gains next week instead of fading them.
      Divergences can & sometimes are burned through but I would say that they play out for a trend reversal (i.e.- correction on bearish divergences) a good 90% of the time. Add in the recent deterioration in market internals as well as low short interest & you have all the ingredients for a swift move down. Maybe, maybe not & we can only wait for some decent sell signals, the first of which could come if QQQ drops back below the bottom of today’s candle. Until then, I’m still holding off on any any broad index tracking ETFs as official trade ideas, long or short but the next official trade will most likely be on the short side.

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