Tuesday April 18 2017
An article in today's WSJ reports that ten stocks account for one-half the gain in the stock market so far this year. Narrowing breadth is a sign of toping action, fewer and fewer stocks are participating in the overall rally.
When stocks break a moving average to the downside, typically they will then move back to re test the failure. That appears to be the case now.
Te first break occurred in late March. Then the DJIA popped back over the 50 day MA. Now it has fallen below again. On Monday the DJIA reached back up to re test
the break-down. The next week or two should tell the story of whether the DJIA can regain its uptrend. Seasonally the market typically peaks on or around tax day which is today.
The NYSE exhibits the same pattern.
The Transports are the better early indicator. Here the Transports have broken two MAs and are re-testing the 125. Notice all peaked around March 1.
Again the same pattern but too early to really call this The Top for March 1. But cycles have argued for a top here for some time. We are now a near perfect 17years from the top of recorded in March 2000 and eight years from the bottom in March 2009. Amazing eh?