The bulls continued their advance recently, but conviction remains in question. In the spirit of And Then There Were None, the advance continues, but with fewer formations providing confirmation. Leadership is narrowing even as price expands, writes Buff Dormeier, chief technical analyst at Kingsview Partners.
Wednesday, Apr. 22 delivered a 92% upside S&P 500 Index (^SPX) Capital Weighted Volume day, though on low participation. The week closed stronger, with Friday posting 85%-plus upside volume on high total volume, providing a more credible show of force...yet shy of our 90% bogie. Across the formations, price continues to press higher, but volume is not fully confirming.
NYSE Breadth – Advance/Decline Line
Indeed, market breadth is sending a cautionary signal. The NYSE Advance Decline Line began the week near all-time highs. But it faded to close near the weekly low, even as the S&P 500 closed at a new weekly high. This divergence suggests narrowing participation beneath the surface.
From a Volume Factor perspective, the longer-term trends continue to lag price. Both Accumulated Capital Weighted Volume and Capital Weighted Dollar Volume are rising, but remain well below prior peaks.
Volume has already registered a lower high and has yet to exceed its December levels, despite price making new highs in both January and again this past week. This divergence reinforces the view that price is advancing faster than capital-backed conviction.
