Some Breadth Indicators

If I were to go through the entire list of breadth indicators, you'd see how negative sentiment is right now, but I'm looking at short term indications which may hint at a bounce continuing this week. When we get to the place in which we have n opportunity to get short some trades on lower risk/higher probabilities, I'll show you the rest of the breadth indicators which are very, very bearish.

For now though, lets look at what's happened recently.

 In green is the breadth indicator, in red is the average being compared, usually the NYSE composite, except when otherwise indicated. This is the % of stocks trading 2 standard deviations below their 40 day moving average, in other words, stocks really falling off a cliff. If you look at the bottom put it on the NYSE Monday vs today, you'll see the stocks trading 2 standard deviations below their 40 day moving average went from 37% Monday to 14% today, that's a huge 1 day improvement,

 Here we have the Bolton Tremblay Indicator which is similar to an advance decline line and reads the same. Note how far the NYSE has fallen, near March lows, while the BTI is just above the April lows. In other words, the market has fallen a lot deeper then the internals would suggest. This is ripe for a bounce.

 The NASDAQ 100 advance/decline line, not a huge difference, but the A/D line is a bit more positive then the average itself.

 This is the New High/ New Low Ratio and look at the improvement from Monday to Tuesday, fro, 15% to nearly 60% in  day-another huge change for 1 day.

Finally the NYSE A/D line, look how far the NYSE composite has fallen, to March lows while the A/D line remains near the higher April lows. This all suggests the market has seen a severe overreaction and is close to a bounce, whether it continues tomorrow or later in the week. The internals tell the story beyond simple price action and these all are diverging positively, especially in the last two days.

Please don't misinterpret this as me making a case that the market is bullish or fundamentally stronger then it appears, only in the very short term is this true. The big picture shows a market that is in a lot of trouble, but any strength we can get will put us in a much better situation to initiate and add to short positions.

I suggested that the market may see a gap lower tomorrow based on 3C's demeanor, thus far the Dow Futures are down about 19 points at last check. Hopefully will be able to find a positive divergence to go long for a bounce and when the time is right, switch that position to a short play.