Ari Wald: This is What Distribution Looks Like

My friend Ari H. Wald, CFA, CMT,  and Technical Strategist at PrinceRidge, has been pretty money on the major trends so far this year. In this week’s note, the technician points out some major yellow lights in the internals. Overall, he thinks the market can settle back in to the uptrending 200-day and then resume the advance. We’re a ways above that level, however, and Ari is recommending caution. He sees momentum picking up to the downside, a higher number of stocks for sale and other divergences within the internals.

The intro to his full notes below along with a few charts that really illustrate his point well.  

Hope you enjoy – Josh

***

S&P 500 Trend is Shifting Sideways to Lower; Intra‐Sector Trading Ideas

Key Points

    •   Expect a sideways trend to ultimately resolve lower.
    •   S&P 500’s 200‐day m.a. (~1450) is key support.
    •   Distribution days and inflecting momentum are concerns. Selling bounce attempts.
distribution

Investment Takeaway: Distribution days on April 15th and 17th along with a break of momentum suggests that the market’s supply/demand balance is shifting and the S&P 500 is entering a period of consolidation, in our view. We expect the index to continue to chop sideways before ultimately resetting to its 200‐day m.a., currently trending higher at 1450. We plan to use bounce attempts in the coming weeks as a tactical opportunity to transition to a Corrective outlook. Given our current Neutral view and defensive portfolio positioning we do not believe an outlook change is necessary today.

This week’s concerns are twofold. First, NYSE declining issues outpaced those advancing by a 35:1 margin on Monday (April 15th) and by 11:1 on Wednesday (April 17th), marking two of the biggest distribution days since November 2011. Declining/advancing volume was also 15:1 and 11:1, respectively. This is indicative of conviction on behalf of sellers, and is especially troubling because it followed an inability for the S&P 500 to sustain a new all‐time high above 1575.

internal breadth

Second, this recent dip has also generated a definitive downward inflection in weekly momentum (Momentum has been moved to Bearish from Mixed in our Scorecard this week). The index’s weekly RSI, for instance, has fallen to its lowest level since January and has likely peaked for the current rally. Currently 62, a reflex bounce in this measure between 65‐70 would be a signal to sell, and the next strong buy point in the S&P 500 may not develop until this momentum tool resets to the 40‐45 range.

***

If Ari is right, this might be a good time to chill out a bit on new longs and start making a list of the things you want to come in lower.

Follow Ari on StockTwits

Follow Ari on Twitter

Source:

PrinceRidge

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. best place to buy replica watches commented on Sep 18

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  2. Bitcoin Loophole Review commented on Sep 21

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  3. 홀덤사이트 commented on Oct 16

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  4. Google Ad Extensions commented on Nov 04

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  5. italian watches replica commented on Nov 25

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  6. sign in tangerine commented on Nov 26

    … [Trackback]

    […] There you can find 65447 additional Information to that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  7. Tree Cutting call now commented on Dec 12

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  8. rolex daytona replica commented on Dec 31

    … [Trackback]

    […] There you will find 66652 additional Information on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  9. Parkside PBS 600 A1 manuals commented on Jan 21

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]

  10. cibc login online commented on Jan 26

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2013/04/18/ari-wald-this-is-what-distribution-looks-like/ […]