20130315 Moving Average Breadth

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20130315 Moving Average Breadth

The broader markets continued to power forward this OPEX week.  The laggard was once again Technology and the $QQQ. Looking at the breadth below, I want to make a couple of points.  First is that divergences are not sealed until the price makes the second (or more) peak.  Until then it is just a potential.  I heard a lot of talk last week about breadth lagging, which I disagree with.  We will make that decision after the next peak.  The other think is how these divergences play out.  You can see many divergences in the breadth numbers, and most of the time they are good for a quick pullback, but the major topping patterns have another clue to watch for.  The grey lines on the charts are my guides.  Dean Christians of Montag and Caldwell taught me these.  If you study the total universe chart you will see that a peak in the Moving averages below the top line on the 20sma and 50sma usually precede major corrections.  It doesn’t have to be a divergence, but a peak near the highs with the MA’s peaking below the upper line.

First the Total universe of 1898 companies posted over the $SPY

3-15-2013 Total Universe with SPYNext I split the universe into 10 custom broad sector indexes

3-15-2013 Consumer StaplesConsumer Discretionary (325)

3-15-2013 Consumer Discretionary

Consumer Staples (91)

3-15-2013 Energy

Energy (132)

3-15-2013 Financials

Financials (316)

3-15-2013 Health Care

Health Care (199)

3-15-2013 Industrials

Industrials (252)

3-15-2013 Materials

Materials (148)

3-15-2013 Technology

Technology (338)

3-15-2013 Telecom

Telecom (24)

3-15-2013 Utilities

Utilities (73)

These are custom indexes so you cannot invest directly in them, but there are plenty of ETFs available for each sector.  For me personally this is another form of relative strength, just with a broader lens .

Good Luck!  It is there for you to make.

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(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)
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About Author


is a Chartered Market Technician (CMT) and Certified Financial Planner (CFPr) in Greensboro Georgia (Outside Atlanta). Founding partner of Barber Lackey Financial Group, LLC, a Registered Investment Advisor. However, this blog is not affiliated with BLFG and does not make recommendations to buy sell or hold any securities.