S&P500 Stock Index vs % of Stocks in the S&P500 > 200 dmaThere is a bearish divergence setting up for the S&P500 whereby the advance is only happening with fewer than 70% of the component stocks in the Index above their own 200 day moving average.
In the past when these divergences set up, it implied that profit taking was just around the corner. Given that the market just had a decent round of "profit taking", I think there is a different way to look at this divergence and structure, but it will be more clear as time goes on. For now, we can see that fewer and fewer stocks are driving the gains in the market. This could very well be the results of the weakness in Oil Stocks. The market doesn't go up all together, but in stages.
The normal event to expect in the coming 12 months would be a correction where a sustained period of 1-3 months holds below the 50% level in the "%of Stocks > 200 Day Avg"
For now, keep an eye on everything and stay tuned to TradingView.
Tim 10/31/2014 1:45PM EST
