A sea of red signals

Our internal breadth, sentiment, intermarket and momentum indicators flashed a sea of red this week. This is based on our simple tally of RED, GREEN and BLACK (NEUTRAL) readings as highlighted in our Market Tour on StockCharts.com. 

The list of negatives is as follows:

1. VIX breaks above downtrend resistance as RSI moves above 50
2. Put/Call is neutral (showing a sligthly bullish bias at a reading of 1.0)
3. NY McClellan Oscillator remains in a downtrend; having crossed below its EMA 20
4. The Down Volume trend has reversed to the upside, surpassing Up Volume
5. Technology (Nasdaq), and Financials relative strength weakens, while Staples take the lead vs. Discretionaries
6. Recent weakeness in industrial metals and continued signs of deflation based on a lagging CRB
7. A sharp US Dollar bounce (potentially signalling a trend change - the dollar has moved opposite equities).
8. Continued strength in Treasuries (and a recent weakeness in corporate bonds vs. Treasuries).
9. Recent weakeness in small cap vs. large cap stocks (a sign of risk-aversion)

 We will accept these signals and remain on the defensive.

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