While the stock market is washed out, it recently was very oversold on many timeframes and sentiment remained awful. That could be the cause of days like Wednesday, when there was a big pop. But there is still plenty to worry about when looking at the technical condition of the market, notes John Eade, president of Argus Research.
Long-term breadth is terrible and has been in the danger zone since early March. The volume of S&P 500 (SPX) stocks above their 200-day average sank to a recent low of 23%, the weakest level since the 2022 bear market (when it fell to 12%). Some 21% of S&P 100 stocks are above their 200-day, while the Invesco QQQ Trust (QQQ) reading has dropped to 28%.
QQQ (YTD Chart)
Data by YCharts
When we look at most charts, it's hard to find a bullish, or even a neutral, chart. Sometimes, things look so bad that they eventually become good!
The NYSE New High-New Lows reading crossed below its 50-day average, its first sell signal since 2022 and 2023. Even more disturbing is that New NYSE Lows recently surged over 1,000 issues, or 37% of issues in the index. When this reading rises above 10%, it generally has been a bad sign for stocks.
From a momentum standpoint, the weekly Coppock Curve has dropped into bearish territory and is still falling, this after tracing out a massive bearish divergence late last year. The monthly Coppock Curve traced out a bearish divergence in late 2024 and is just starting to break its 21-month exponential.
Historically, this has led to some really bad market conditions, with major sell signals in 1981, 1987, 1990, 1992, 1998, early 2008, late 2014, and early 2022. However, not all bearish crosses have led to bear markets. Most led to at least major corrections, which we already have seen.
Technical Assessment - Long: Bullish
Technical Assessment - Intermediate: Neutral
Technical Assessment - Strong Sectors: Consumer Staples, Information Technology
Technical Assessment - Weak Sectors: Energy, Real Estate
