US stocks have hit record highs as individual investors have recently increased their participation, according to technical analysts, but the bull market base is beginning to crack. Sentimen Trader.
According to analysts, the largest breakdown of positive market trends tends to occur when there are fewer stocks that can help bring benchmarks to new records.
In a research note released Tuesday, Jason Goepfert, head of Sentiment Trader and founder of Sundial Capital Research, an independent investment research firm, said:
“That’s what’s happening now,” he wrote.
Notably, SentimenTrader researchers say that even the S & P 500 index has few stocks that close above the short-term moving average.
Along with the Nasdaq Composite Index, we were able to record a record high closing price, as on Monday.
Goepfert said the S & P 500 closed on Monday at record highs. 10-day moving average.. ”
“It’s a lot of the short-term downtrend on the day the index closed at a high price,” he said.
The breakdown of the width may seem trivial, but SentimenTrader said it last occurred in August last year, close to the time of September when the market temporarily fell. I will.
“The reason why a relatively small number of stocks are above the 10-day average is that relatively few stocks are rising on the days when S & P shows a rise,” the researchers write.
And it’s not just the relatively short 10-day moving averages that are starting to narrow.
On Monday, about 68% of S & P 500 shares traded above the 50-day moving average, the lowest since November 6, according to Dow Jones Market Data. This is below the 2021 average of 74.5%.
Even if the market does not look at price breakdowns or revisions, Goepfert tends to have moderate to poor overall market returns when the range begins to narrow or when fewer stocks are hitting new highs. Claim that there is. McClellan OscillatorSub-zero width reading.
“The chart shows that S & P’s annual return since 1928, when oscillators fell below zero, was the worst -3.2%,” he said.
Sundial Capital researchers say it’s probably not a coincidence that the readings are narrowing, with growing speculation that retail investors will use the option of expressing a bullish view.
“Speculation was the only one in 20 years that approached its current level in the second half of August last year,” he wrote. “It’s no coincidence that the first signs of stock deterioration, which is the basis of the major indices, are beginning to appear, as they are today,” Gepfeld added.
Others have expressed concern about Wall Street, with some market participants The current enthusiasm for investment is too close to the dot-com bubble paradigm.
The US stock index on Tuesday bounced on average for the Dow Jones Industrial Average as the S & P 500 Index and the Nasdaq Composite struggled to maintain record highs.
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A stock market analyst warns that “ice is breaking” in a bull market
http://www.marketwatch.com/news/story.asp?guid=%7B21005575-02D4-D4B5-4572-D22BB903C886%7D&siteid=rss&rss=1 A stock market analyst warns that “ice is breaking” in a bull market