Stocks above Key Moving Averages on the $SPY. We are always most concerned about the longer term averages. The 20 Day swings normally but the 200 Day should stay strong in a Bull Market or in a transition to one.

The $NDAQ is looking weak. Very weak under the surface and close to slipping below 30% which is Stage 4 territory.

New Highs vs New Lows play this one out. Big New Low spikes on the $NDAQ. Not what we want to see.

Anyone can tell you the top industry group in terms of RS. Not many track the move from low Relative Strength to the market to high. This tracks the weekly change in Relative Strength by Industry Group using the Dow Jones Industry Groups.

I want to see a group fly up the ranks from week to week or over the course of multiple weeks. A good example here is Recreational Products. Then click and check the stocks that make up the Industry Group (Link to Stockcharts, Free Industry Group Table - No Sign Up Req)

This Week New Highs vs New Lows surpassed the July/August Bear Mkt Rally level, just about. It peaked around this level last time around before we moved down to make new lows. $SPX $QQQ

Looking at the % of Stocks above Moving Averages though we see a very important difference and that is the % of Stocks above the 200 MA. This shows much wider participation. $SPX $QQQ

Here is the information on one chart for $NASDAQ & $SPX. We are certainly at a point of a pullback being required and next week will certainly be interesting but it's difficult here not to be looking for RR to get long again on a Pullback in my opinion.

If you were creating a coffee can type portfolio for your child that they would get access to when they are 18 and you're going to blindly (ish) DCA into it regularly for them.

What are 5 Stocks you would HAVE to put in there?

Goal is to compound and also get them interested.

Here is some $SPX Market Breadth Data. My absolute favourite indicators of Breadth are New High vs New Low, Advance Decline & % of Stocks over the Key Moving Averages. Remember and Index is a basket of stocks so it will ALWAYS lag the stocks. So let's take a look at the $SPY SPX

Below we have a clean chart of the Index on a weekly timeframe. I suggest looking at the 2020 Bull Market first. Our first indicator is the New Highs vs New Lows. As you can see in a bull market we have plenty of new highs, nothing complicated there. See as the market topped out new lows started popping for the first time in a year? The index goes higher (Because it Lags) and then it fails. Nobody could tell from New High vs New Low whether we are going to to have a correction or a large bear. It's just a piece of the puzzle.

Below this we have the % of Stocks over their 200 Day Moving Average. This is a long term moving average and as you can see really began to decline long before the Index topped. In fact by the time the index tops it has declined a lot. This is breadth deteriorating over a number of months, less stocks are participating and only a few are holding up the Index. This can't last forever and just as the New High vs New Lows turns we have the final straw and the market begins to fade.

So what is happening now? Now, for the first time we are beginning to see a steady increase in participation. This has been improving for months now, New Highs vs New Lows also improving. Also it is worth noting that the EQUAL WEIGHT S&P is outperforming the weighted, meaning if you balance out the megacaps the other stocks are now doing better than before. This is all positive news. Is it a new Bull market? I have no idea. Right now we're testing that idea. We could absolutely roll over here.

For some reference here is the 2008 Period with the same indicators.You can see that we really didn't get the same participation improvement before that massive rollover. These are just some basic indicators but they help a lot, and help a person zoom out.

Below is the same indicators across the $QQQ

Hope you enjoyed this post and it helps you out.

Since my last sector analysis post we've seen improvement and false breakdown reversals in many of the weaker sectors.

Starting with Technology Sector. Still in the same trend but knocking at the door once again to try to break into the upper half of the overall range. The Red & Green Clouds show potential resistance zones. These zones are not absolutes and are just for reference. They are based on Ichimoku Clouds if anyone wishes to look them up! $XLK

$XLF Financials very strong and pushing to breakout above the range. Will likely float around this upper range for a while and test it's upper boundaries as the pivot builds.

$XLY Consumer Discretionary was one of the weakest sectors in my last post and despite a rally it still is. We are now right at the breakdown trend so the action here is very important. Best long term scenario is some basing sideways to form a solid range between the $135 and $145 approx areas.

Materials has had a textbook looking double bottom and is now peaking above the trend. $XLB Needs to stay up in this area as it consolidates to continue higher. Now back above the major MAs with them trending upward again.

$XLRE another of the weakest sectors has established a range after escaping the breakdown. I would be skeptical of any breakout from this area unless it bases for a lot longer. See it is right at the downward trend line also.

$XLE Energy still right up there close to All Time Highs. Not much to say here except it could go sideways here in this range for as long as it likes. Note Green Support cloud in the lower half of the range.

$XLP Consumer Staples similar to Energy just trading in that big range now. Could continue to do so for a long time before deciding a direction.

Industrials have improved the past few weeks $XLI. Sitting in that top half of the range. In stocks these All Time High Breakout attempts have mainly been failures for the past few months. It remains to be seen if it will be the same with the Sectors.

$XLC Communications Sector is the weakest from my last post. It has since reversed strongly and up out of the range. This reversal is certainly a positive and has pushed the sector above the Key MAs. We are approaching a large trend line now where I expect it to have difficulty. This will need a lot of basing after such a huge drawdown.

$XLV Not much has happened in healthcare sector still in that big range though we have moved to the upper half again. Currently pulling back in a measured fashion. Will need to push back toward the upper half of the range soon.

Utilities $XLU have rallied but still in a precarious position at the lower half of a range. I think this goes back to the bottom of the range again and potentially sets up to breakdown.

Here is a simple long term technical idea to not suffer terminal decline in a company. All of the below are big winners and you could say well I could have ignored the downturn, which is true and for example the GFC was not company specific so you could have ignored it. But by using these rules these rules you won't get caught that time it is terminal. You also won't get stuck in dead money for years.

Using a 50wk EMA + 200wk EMA Cross Signal there is 1 occasion since the 1983 Buy Signal where you would have sold $DHR. That was not company specific it was the GFC. It's okay though because you'd have bought it back soon after.

$DPZ Buy signal in 2010. Still no sell signal....

$AMZN bought in 2007, Sell Signal has just triggered...

I don't know what the next market leader is. You don't. Nobody knows. But technical analysis can give clues using the characteristics of past leaders before they took off.. Take $CWAN for example. It's early days but look at how it has disconnected from the market.

Former leaders coming out of bear markets like $NFLX did exactly this. Let's go all the way back to 2009 for an example with $NFLX. An incredible stock that at some point disconnected from the market. It's highly unlikely that $CWAN is the next $NFLX!

However, by studying past Super Performers you can see the characteristics in Technicals & Fundamentals. This is a fantastic way to narrow down the universe of stocks you are studying and taking note of regardless of your time frame.

Study past great winners.

Trendlines only look great when they work. However, I found this one quite interesting. This long term trend shows the bubble move that $TSLA made. Now we come back to earth. This lower trend line may not be hit for a long time but it would make sense that it eventually is the area that the stock begins to bottom out. I think it's highly likely we see $TSLA at around $75/$80 in the relatively near future. This would fill several large gaps on the chart. It's feasible we even see $50 in my opinion. After that then who knows. After huge drops like this a large base will be built this could take months or more likely years to develop. Similar to it's previous long technical sideways action for years.

Where it goes from there depends on the companies fundamental performance. It's going to be difficult for every company through a recession but if they continue to innovate throughout that then the cycle begins again for one of the biggest winners of the past decade.