I say trouble right here in River City

“Well, ya got trouble, my friend. 
Right here, I say trouble right here in River City”
(from “Ya Got Trouble”, a song by Meredith Willson from the 1957 Broadway musical The Music Man, and its 1962 filmed version The Music Man.)

On June 5th I gave a Decaying Markets Update, showing how Investor's Business Daily's Accumulation/Distribution ratings and the Up/Down Volume Ratios were indicating a weakening market. Running the analysis again this weekend confirmed that the major markets continued to weaken even as a couple of them, the NASDAQ Composite and the Russell 2000 indexes, set new highs last week.

But an interesting clue about what could happen in the near future stood out. First, let's look at the S&P 500 daily chart (and you'll find similar characteristics in the other major indexes). The S&P 500 has been struggling to set new highs, and when it breaks out from previous resistance, it hasn't been able to go far before selling, or at least consolidation, sets in.

So when I ran the latest Up/Down Volume Ratio calculation on the [current] S&P 500 component stocks, something struck me as interesting. Four times in the past eight weeks the number of stocks within the S&P 500, with Up/Down Volume Ratios >= 1.3 (which I find usually indicates institutional accumulation), dropped below 80:

It's not that the specific number of 80 has any meaning. But these are unusually low numbers of stocks showing U/D Vol numbers that typically accompany stocks under institutional accumulation (you could also focus on the jump in the number of stocks with ‘Down' numbers in triple digits).

So when was the last time the ‘Up' count fell to low numbers? It was back in late September, early October of 2014:

By coincidence (?), at that time, the S&P 500 was also having trouble setting and holding new highs:

What happened shortly thereafter?

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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