Stocks Rally But Not Yet Confirmed by Internals

As you will see in the Briefing, it is important to understand the development (trend) of price and its structure (strength). This week, the Stock Indices were basically in rotation at an important resistance level. Today, the S&P broke above that resistance, but not followed by the NASDAQ and Russell. What is more concerning is the still lack of volume. It did tick higher today but the current level suggests some risk of the rally faltering. Additionally, market breadth is not strengthening. New highs are beginning to move higher, but the overall market still appears to be structurally weak.

Based on the above, if there is any continuation to the rally, we must see volume increase. More buyers must come into the market. Also, the majority of stocks need to begin participating. If not, the risk is still to the downside. What happens in Monday’s trading will be very important. The market is neither overbought nor oversold. However, it does appear to be tightening, suggesting a larger move may be coming.

If there is any move higher without a strengthening of the structure of this rally, it should be viewed as suspect.

DAILY BRIEFING 190412 from Joe Mertes on Vimeo.

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