KI$$ sell, markets breadth and VIX technical charts review 2/25/12

Here's a review of our favorite technical charts looking at stock market breadth and internals strength, plus the volatility index. You'll see why KI$$ (my proprietary "Keep It $imple $wings" composite signal) is now going into sell-strength mode. First, the bullish percent showing how many stocks within the Nasdaq 100 index ($NDX) have bullish point-and-figure (P&F) charts, as shown via Stockcharts.com. All these charts are from there, and I've added the indicators and sometimes trendlines I find insightful. The $BPNDX has dropped back under 80%, which is a sell signal, and its StochRSI has dropped to negative which is a sign that it and the $NDX are likely to pull down lower. Interestingly, the bullish percent chart for $SPX is still positive. Since the $NDX often leads, however, it's a warning sign for stocks generally.

The McClellan oscillator and summary index for the $NYSE index chart ($NYMO below) shows the oscillator found temporary support at one of my uptrend lines. But it's still under zero. Unless it mounts above zero again - unlikely, given the $BPNDX showing exhaustion - it's likely to drop to the lower line before finding the ability to support a stocks rally again. This is also confirmed by the summary index which has curled down.

The Arms trading index ($TRIN) tells an interesting story. "Normally" when the 10-day moving average is above 1.20, the stock indices are oversold and ready for some rally; and when under 0.80, they're overbought and ready for correction or at least consolidation. But for months, even the 50-DMA has been near or above 1.20! Maybe the interpretation is that the market has had plenty of buying power supporting the advance. Another way to use $TRIN is to watch whether it's going up or down, for short-term signal confirmations (when it's dropping, stocks are generally rising, and vice versa). Right now, after the daily reading Thursday was under 0.80 and it flicked up yesterday, it supports the idea that the market could take a breather. And the $TRIN plus its moving averages would likely go up again above 1.20.

The volatility index ($VIX) isn't at a lower low, but not really a higher low either. Perhaps it's a double bottom, with stock indices at a higher high. That's at least a clue that stocks can go into a consolidation or more.