AT40 = 48.9% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 63.5% of stocks are trading above their respective 200DMAs
VIX = 11.5 (volatility index)
Short-term Trading Call: neutral

Commentary
Market weakness continued to grow yesterday even as the major indices barely notched losses on the day. AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), did something it has not done in 79 trading days: it closed below 50%. AT40 has now erased all but four trading days of post-election gains.

AT40 (T2108) close at a level last seen shortly after the November U.S. Presidential election.

Without AT40, the current marginal declines in the major indices would look completely harmless. Instead, my alarm bells are ringing incrementally louder. Yet, I STILL cannot flip bearish because the S&P 500 (SPY) easily avoided closing below the low of the trading day before its last bullish breakout (2359). Note that both the S&P 500 and the NASDAQ (QQQ) are (marginally) trading below their respective uptrends defined by their upper-Bollinger Bands (BBs).

The S&P 500 is orderly drifting into last week’s gap up.

The Nasdaq is heading toward its uptrending 20DMA support – something the tech-laden index has not done since the beginning of the year.

The volatility index, the VIX, is also showing next to no signs of stress.

The volatility index gained 1.9% on the day as it barely acknowledged any stress on the day.

Perhaps the most critical test that appeared at the end of the day happened for small-caps. The iShares Russell 2000 (IWM) closed at its low of the day…right on top of support at its 50DMA. Granted, multiple 50DMA breakdowns starting a little over a month ago failed to generate follow-through selling.

The iShares Russell 2000 closed right on top of 50DMA support.

While the growing bearish signals have made me more and more wary, I continue to look out for bullish (swing) trading opportunities. I found two in somewhat surprising places.