Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
There is some faulty action under the surface today even as the indexes don’t show supreme weakness. This is far and away the worst breadth we’ve seen since the June 24th bottom if we were to close here. There has not even been a -1000 type of closing reading since the 24th; currently we have a -1700.
The S&P has been traveling the 5 day moving average since the July 5th breakout which is extremely strong. Today that was broken and we see the 10 day moving average in play now. That is perfectly normal versus the “V shaped” moves we have become used to in the QE era. Of course if that breaks, that opens the door up to the 20 day moving average. We are now back below the intraday highs of May once more on this index.
Both Monday and Tuesday the indexes held up but there has been a lot of weakness under the surface… yesterday we had major laggards group like metals and mining rally to hold the indexes up but a lot of the stronger groups of late like biotechs and transportation faltered. Hence, while the indexes are not far off their highs this week, there are some questions being raised below the surface.
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