A Measure of Market Breadth: Percentage of Stocks Above Their 200 DMAs

A Measure of Market Breadth: Percentage of Stocks Above Their 200 DMAs...

For the past few weeks, we have watched this breadth gauge climb from an acute oversold condition (less than 20% of NYSE Stocks Above their 200 DMAs) in late October into Neutral Territory around 55% just before yesterday's Fed policy statement, at which time I suggested that "the pendulum of this gauge usually swings to a minimum overbought level near 70%" prior to hinting to us that the underlying market is nearing upside exhaustion.

In the aftermath of yesterday's "Fed Pivot," the Percentage of NYSE Stocks Above their 200 DMAs has surged to 64%, which if nothing else is nearing overbought condition, and as such, is warning us that the October-December advance IS getting frothy-- and approaching a much more volatile two-way directional market.. 

On the subject of Volatility, Cash VIX has entered the downward Thursday-Friday index profile during periods of market strength. Tomorrow happens to be December Monthly OPEX. Barring some outlier market shock, VIX behavior today is warning us to expect continued downward pressure in the VIX into tomorrow's close. From a technical perspective, in the absence of a climb above nearest resistance at 12.50/55, VIX points lower into the 11.00 area next, which also suggests that SPX will avoid intense two-way volatility at least until after tomorrow's close... Last in VIX is 12.07...

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