Lee AdlerThe S&P 500 rally remains intact, but its narrow breadth and clustering at resistance levels raise questions about durability. Cyclical signals show strength, but divergences warn of fragility if momentum fades.
Long term and intermediate term buy setups increased to nearly one quarter of the 1775 stocks that met minimum price and volume criteria last week. But there were also many sell side setups. Setups are not guarantees. They may move in the direction of the setup or they may not. But starting from this point normally leads to success if the short-term triggers are hit. The raw numbers are not particularly useful as broad market indicators.
The S&P 500 rebounded from minor support to test the next resistance cluster, but remains locked in a short-term trading range with no clear sign of the next breakout. The rally is still narrowly based, with small caps and cyclical breadth indicators lagging badly.
The attached report has the specifics on what you need to know and to look for for the next big signal.
During the week ended Thursday, August 7, out of 1724 stocks meeting institutional price and volume criteria:
Setups:
259 met major or intermediate trend buy setup criteria, of which 91 triggered short term. But virtually all of these were at the beginning of the weekly period. Few were at low risk entry points by yesterday.
343 met major or intermediate trend sell setup criteria, of which just 1 triggered short term.
Table of picks and charts in subscriber report.
The market remains in a narrow, liquidity-driven uptrend, fueled by residual cash reserves and dominated by the Mag 7.
During the week ended Thursday, July 31, out of 1650 stocks meeting institutional price and volume criteria:
Setups:
68 met major or intermediate trend buy setup criteria.
175 met major or intermediate trend sell setup criteria.
FREE REPORT –
The S&P 500 has rallied relentlessly to all time highs for 3 months. A broad based bull? Nope. Mostly Mag 7. Or rather, Towering Two.
Here’s a graphical essay that speaks for itself.
Screen results this week finally reversed the recent string of small losses as I continued to utilize weekly charts and signals to select picks, as opposed to using triggers from only the most recent day.
The market remains in a narrow, liquidity-driven uptrend, fueled by residual cash reserves and dominated by the Mag 7.
Despite new short-term highs, the S&P’s rally remains precarious and thin. Divergences across indices, failing cycle thrust, and deteriorating cycle breadth indicate a market under internal stress. The market has arrived at the precipice of the liquidity cliff.
All but a couple of shorts on the list were closed last week and none were added this week because the screens identified no good short-term setups.
Short-term cycle corrective phases have begun just as the market approaches critical resistance. Sell signals are multiplying. The uptrend remains intact — but it may not survive another bad day or two.