NAZ Hindenburg Omen

For several weeks, the popular indices have produced extreme internal weakness as measured by advances and declines via the Advance/Decline Line, the McClellan Oscillator and the McClellan Summation Index.

One of the most alarming indications of a serious decline ahead has been the record low McClellan Oscillator readings as SPX has been setting all-time historic new highs.

The above array shows the Jaws, the negative divergence, between the SPX, the NY Advance/Decline Line, the SPX Equal Weighted Index, IWM, and NYMO in the last panel .

The weakest sector yesterday was SMH, the Semi Index which gapped open and closed near session lows thus registering a Gilligan Sell signal.

The square-outs in AMD at 185 and NVDA  at 629 exerted their downside influence.

We’ll walk thru both in Monday’s morning report.

In tandem with those two generals giving potential Buying Climax sell signals the NAZ produced a Hindenburg Omen yesterday with 150 new highs and 132 new lows each exceeding the 2.8% of threshold 4470 issues traded on Thursday.

The market looks a lot like the way sustained slides off important tops.

2000

2008

February 2018

December 2018

March 2020

There were 6 such downside setups in 2022, below is the one going into the October 2022 low.

In sum, the market can skate around with negative internals, but it is doing so on thin ice.