Bobs Stock Market Forecast Newsletter – July 6, 2017

For the last few months there has been a relative strength divergence on the S&P 500 and it is still there today as you can see in Chart 1. What this means is that the rising market is doing so on decreasing strength. This often happens and sometimes it resolves itself and other times a correction occurs and resets the indicators before another push higher. I have been predicting the latter.

The Nasdaq has become volatile during the past month. After hitting an all time high it has had a series of big down days followed by big up days. Volatility often increases at market tops of significance and I take this action as a sign that a correction of some significance at hand.

Yesterday, for example, the market was up but the number of falling stocks beat the number of rising stocks by more than 1400 issues. We like to see more advances than declines when the averages close in the plus column.

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