While it appears Stocks are surging and the NASDAQ certainly is proving that correct, the other Indices are in a pause phase. More importantly, the structure of the current rotation is still weak and continuing to weaken. NYSE volume is the weakest it has been since the beginning of March. Breadth continues to deteriorate and the number of stocks breaking out to make new highs has not budged.

In analyzing the markets, all we can do is use the analytical tools we have developed. Those tools tell us the majority of stocks are in a rotational pattern and fewer and fewer shares are being traded each day. This suggests extreme caution.

Because there is no strength to drive the majority of stocks higher, excepting the NASDAQ, the risk is to the downside. Buyers are scarce. Sellers are nonexistent for now. Should the selling begin, it could be very fast and furious as fear of testing the March lows becomes obvious.

DAILY BRIEFING 200509 from Joe Mertes on Vimeo.