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Breadth check has Nasdaq, S&P 500 wheezing



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U.S. equity index futures red: Dow off ~0.7%

May import prices < estimate; May export prices < estimate

Euro STOXX 600 index down ~0.8%

Dollar, crude, bitcoin rise; gold up >1%

U.S. 10-Year Treasury yield edges down to ~4.22%

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BREADTH CHECK HAS NASDAQ, S&P 500 WHEEZING

The Nasdaq composite .IXIC and S&P 500 index .SPX both scored record closing highs for a fourth-straight session on Thursday. That said, concerns are growing over the narrowness of the advance.

Indeed, a check of Nasdaq and S&P 500 breadth measures has traders wondering if the rise in the indexes may be close to exhaustion.

Looking back at the Nasdaq, in the wake of a protracted daily Advance/Decline (A/D) line divergence, the composite peaked in November 2021:



Both the IXIC and the A/D line then trended down into late 2022 lows. Since then, and despite the Nasdaq advancing to new highs, the breadth measure has fallen to new lows.

With this continued divergence, Nasdaq A/D line failures at a resistance line from late 2021 in July 2023 and again in March of this year did warn of impending IXIC setbacks.

More recently, in May, the A/D line once again failed at this resistance line. The measure has since fallen to fresh record lows.

A check of the S&P 500's daily A/D line is also concerning. This is because, over the past nine years or so, S&P 500 index highs and S&P 500 A/D line highs have tended to be coincident. Thus, since there was no divergence, the breadth measure failed to offer an early warning of impending S&P 500 weakness.

However, more recently, this A/D line topped on May 17. It has since diverged vs the S&P 500's fresh record highs:



(Terence Gabriel)

*****



FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:


M&A ACTIVITY: REBOUNDING AND STILL FRIENDLY - GS - CLICK HERE


NOT YET TIME TO BUY THE DIP - CLICK HERE


TECH STOCKS STILL PROPPING UP MARKETS - CLICK HERE


OATs SPILLOVER EFFECTS - CLICK HERE


STOXX 600 SLIPS, FRANCE'S CAC 40 PLUNGES FURTHER - CLICK HERE


EUROPEAN FUTURES INDICATING SMALL REBOUND, FRANCE STRUGGLING - CLICK HERE


BOJ'S DOVISH SURPRISE, AI AND THE POPE - CLICK HERE








NasdaqADL06142024 https://tmsnrt.rs/4b4qgRe

SP500ADL06142024 https://tmsnrt.rs/3KHmFxS

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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