NYSE Summation Update

The market has gone sideways to work off the overbought condition of the market which can be seen as bullish or bearish depending on what your bias is. The concern to me is this sideways action has kept the breadth neutral over the last 10 of 11 trading days and has caused a halt to the crawl up in NYSE summation index this last Friday. The summation index now requires +17 advancers to continue its climb up.
I’ve been very focused on this summation as it’s indicative to what the overall internals of the market are doing presently. If anyone missed the article written by Tom McClellan , I would encourage you to take the time to thoroughly understand what he’s looking for and what I’m keeping a close eye on too.

I’ve included a bar chart summation that I use to help me determine what is required to halt the summation slide, currently it’s tiny at +17 advancers, but never the less the direction of the summation is something I’m watching closely. The second chart is the raw summation and the third chart is a ratio summation that Tom McClellan discusses in his article.


Another chart I watch closely is the 10 Day and 30 Day Moving Average of the NYSE Advancers Minus Decliners. It’s slowly declining and beginning to show a negative reading. The bothersome part of this chart below is a clear negative divergence that took place on Wednesday. When the SPX was testing higher levels, the 10 day (blue line) chart made a lower high. As you can clearly see we’ve gone from +900 area on the 10 Day (blue line) to now a neutral reading of -28 on the 10 Day and +28 on the 30 Day MA.

Looking at the numbers were dropping off from 10 days ago we could easily have a 10 day reading in a deeper negative territory early in the week. What concerns me most about looking to short the market is the fact the 30 Day(red line) is still very low and the 10 Day is starting to get into negative territory. If you look very closely the 30 Day has a strong tendency to climb much higher from where it’s at now, before the market just rolls over. When I look at my spreadsheet I can see that there is a high chance that the 30 Day could be in the +300 area at the end of the month which would make the market overbought on a intermediate time frame.

Lastly, I’m watching the NYSE 10 Day Moving Average Highs Minus Lows Indicator and I’m seeing a stalling in this indicator (see chart above).  A lower high from September would be another negative divergence. At this juncture I don’t see enough evidence for a clear cut reward in any one direction for the market at this time.