Another very clear breadth chart.   There have been two clear opportunities for this rally to roll over: the weakness in June and then again in August.

If we get a strong move early this week, I suspect that we’re headed higher.  If there is a significant broad-based pullback that follows through, this range may still be in play.

Over the past year, $NYUD has displayed a fairly clear pattern of rising and falling volatility.  As the market approached local tops, extreme market swings in both directions diminished and as it started trending down, they increased.

Now something curious has happened in July.  Note the almost complete absence of negative market breadth.  You can see this briefly coming off of the march bottom, but this time it lasted much longer.

So is this a bull market initiation move or something else?  The following chart shows some moving averages of the ratio of NYSE up-volume to total-volume.

It certainly looks consistent with the last bull market initiation.

CMF clearly shows the strength in breadth and liquidity that fueled the most recent surge.  Is there more where that came from? Is it significant that it’s coming on declining volume?

Some thoughts on breadth relative to the weakness we’re seeing now.  How will we distinguish a minor correction from a stronger move?

We just got an initial sell signal on the McClellan Summation Index.  Looking for continued weakness in the McClellan oscilator (inability to hold above zero) and break of cumulative breadth trend to confirm a down move.

The last $NYSI top is a good example of poor confirmation.  Breadth weakened some, but stayed strong.

Are we getting a bull market signal from the MACD on the monthlies?  It would appear so.

My reservation, though, is that the signal is coming so far from the low with relatively little sideways basing action preceding it.  And it  just doesn’t seem to pass the smell test.

I don’t know whether this has any significance, but I notice that $NASI and $NDX are showing some divergence where $NYSI and $NYA are not.

In any case, the bunching on the McSums ought to signal caution.  Perhaps only temporary caution, but it is there.

When the RSI-14 on NQ futures has crossed below 70 from above, it has been a good signal for short-term weakness.  It looks like we have that signal now, coming off extremely overbought levels.