SPX Double Top or Breakout?

As speculated during the last post the market reaction to Trump's election marked an extreme sentiment low and a rally has ensued for the past couple of weeks.

American indices are now back at or exceeding previous highs so the important question has now become whether the indices are en route to an extended breakout or on the verge of a reversal leaving double tops and false breaks on the board? Most breaks are false so at the moment I have a bearish bias but personal sentiment is a poor basis for analysis!


BREADTH

Firstly for the NYSE...

The Russell2000 and Nasdaq Composite Index can both give leading indications however at the moment it's a very mixed message. The Russell has been on an absolute tear with a significant break to higher highs the Nasdaq has been quite subdued, as can been seen by the index ratios in the following chart.

The McClellan Oscillator has printed a spike low and moved above zero. There is a small -ve divergence which is perhaps worth noting but that's about all... This indicator can diverge for soooo long!

The summation index is a bit simpler... After an extended decline it has now turned up for the longest run since July.

The cumulative NYAD is setup for some -ve divergence for the first time in a long while.

The NYAD ema20 (my favourite!) is again above zero but does not share a -ve divergence with the NYMO.

Bullish Percent has moved up but is still a long way below its August highs... So a clear -ve div. to my mind.

New lows are strange... They moved up as the election dived into the election low but they continued to rise as the market rose. It's such a big discrepancy it makes me think that there's something wrong with the data.

New highs quite possibly have a clue... The have risen during the recent rally but are now set up for a -ve divergence.

For the ASX the story is similar to the above although the XJO has not rallied anywhere near as high and the Summation Index has not made the same clear reversal.


SENTIMENT

The NAAIM sentiment number did not drop below 50 and has now spiked back above 80... into 'high' territory.

The equity put/call ratio has made a sharp reversal and is relatively neutral. It could mark a price high here but it is certainly not showing signs for a price low.

The VIX is now down below 13 again. At a level where tops are possible but it can stay here for a long time of course.

The close back inside the Bollinger Bands again proved to be a good indication of a lasting price turn.

SUMMARY

Price is now 10 trading days up from the low so if this is to be a 12 trading day move there is still a couple more days left to run out.

The Russell is strong and the Nasdaq is weak.

NYMO has a tiny weakness but the NYSI is strong.

Cumulative NYAD is moving up, but is diverging overall.

Sentiment is overly bullish but the trend is strongly up.

So many conflicting signals!

I think it's best not to ignore the obvious here which is that there are no clear conclusions.

There are some divergences in play and sentiment is back to a high level but breadth is not collapsing so it would be wrong to expect a sudden or immediate reversal.