The S&P 500 and the Nasdaq 100 are having a good year with both indexes showing solid price gains from January to the present. Nevertheless, some problems are showing up with breadth divergences and other issues which tend to suggest that this bull market’s underlying strength may be waning.
Although the large cap S&P index just hit a new high, the former stock market leader, the tech-heavy Nasdaq 100 can’t quite get there. Rather than analyzing in depth what the reasons might be, here’s a quick look (with commentary) at the price charts for each index and for some of the major components.
S&P 500, Nasdaq 100 Charts.
The S&P 500 daily price chart:
Price hit a new high this week and the index continues to trend upward, well above both the up trending 50-day and 200-day moving averages.
The Nasdaq 100:
The index refuses to go along with the new highs seen in the S&P 500.
Apple:
The stock refuses this week to make it above the October high. It’s close, but no cigar, and it’s peculiar given the new highs in the S&P 500 this week, of which Apple is a huge component. News that Berkshire Hathaway has pared positions may be having an effect.
Amazon:
New index highs this week but the internet retailer founded by Jeff Bezos would not make a new high.
Microsoft:
The stock, with a market cap of $3.1 trillion, peaked in early July and shows a series of lower peaks as the weeks and months progress. It looks as if the 50-day moving average is about to cross below the 200-day moving average, not a good sign for the monster Nasdaq 100 and S&P 500 component.
The generals should be leading the soldiers but that’s not the case now with Apple, Amazon and Microsoft as these large capitalization stocks ease off their peaks.
The percent of S&P 500 stocks with bullish point-and-figure chart patterns (bullish percent):
Despite higher highs in November for the major indexes, this breadth indicator shows that fewer and fewer components are participating.
The number of NYSE advancing stocks versus the number of declining stocks:
It’s a lot of squiggles but the main thing is that the recent mid-November high is lower than the early November high — and the early November high is lower than the late August peak. This, despite new index highs, is a breadth negative divergence that reveals the underlying weakening.
More analysis and commentary at johnnavin.substack.com.
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