Weekend Review 03/10/2019

The underlying structure of the indices makes it improbable for them to undergo a high momentum phase.  If they do it indicates the underlying buying  is not only broad based, but demand is exceptionally high resulting in rapid price appreciation over a short period of time.  These periods are not sustainable and tend to result in sharp pullbacks.  This past week the major market averages have pulled in, but not enough for all them all to unwind.

SPY Exits High Momentum Phase

COMPQ High Momentum Phase

The selling pressure over the past week has inverted new highs to new lows across multiple time horizons.  

New Highs - New Lows

The number of stocks above their 20 period moving average has unwound to a level where it is becoming extended to the downside.

%Stocks > 20 Period

T2018

T2108, the percentage of stocks above their 40 period moving average has unwound from extended levels and pulled back to ~50%.

Of note is that the number of stocks that have made moves of greater than 13% over 6 weeks is close to flipping.  It will be worthwhile observing if this hits higher time frames.

Stocks > 13% 6 WKs

Currently I'm approaching this as a pullback within an aggressive breadth thrust.  I expect a pause as new setups emerge.  Until things firm this is a risk management market.  Being attune to when stocks stop making new lows across multiple time horizons and when buyers step back in will be a primary focus.