Near-term technical divergences suggest that the Large Cap universe may be heading toward a short-term period of consolidation and/or a pullback. Many areas, including Small Caps, have been doing so for the past few weeks/month. However, the divergences are not yet enough to change our supportive, non-trading domestic equity market outlook. Consistent with this, minor tactical support for the S&P 500 (2584.84) exists at 2566, with a more substantial tactical support range between 2544 and 2540. A one-year uptrend line comes into play at approximately 2525.

In order to “add some color” to the comments above, as well as to my observations from last week’s “Global Macro Economic and Technical” webinar, please review the charts of a few internal equity market measuring tools:

Chart depicts since mid- to late-October, the average S&P 500 component is not rallying to the same degree as the mega-cap components of the index.  In other words, fewer stocks within the Large Cap S&P 500 universe are rallying, similar to what is happening in o ther areas of the market. 
Percent of NYSE Stocks Above 50-Day Moving Average. From my experience, this indicators is NOT a good "timing" tool. However, it confirms the previous chart. Specifically, fewer stocks have been participating in the recent rally. 
NYSE Common Stock Only Advance/Decline Line. A single non-confirmation between these two, as is currently the case, would suggest the odds favor a consolidation/pull back. A series of non-confirmations would suggest the odds favor a more substantial decline. NOTE: a similiar non-confirmation occured between the SPX and the "Traditional" NYSE A/D line.

Have a wonderful week, and please know that Day Hagan Asset Management appreciates your support!

Art Huprich, CMT
Chief Market Technician
Day Hagan Asset Management

—Written 11.13.2017. Chart sources:

Print Copy of Article: Day Hagan Tech Talk November 14, 2017 (PDF)

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