Summary:

• The US30 has rallied to an all time high this morning
• However the US100 is lagging and noticeably nonperforming
• The Hindenburg Omen for the US100 could be seen as a warning sign

US stock markets have opened for the final time this week at similar levels to last night’s close. There is some interesting divergences between the main indices going on at present with the US100 lagging the US30. 

Thursday saw some early weakness in stocks during the European morning but after the US cash session began the dips were bought and the majority of losses for US indices recovered. The US30 ended close to a record high and today has briefly popped above its previous peak to trade up to a new all-time high of 21364. 

 The US30 has enjoyed a strong week and earlier today moved up to an all-time high of 21364

The price action in the US100 hasn’t been quite so bullish however with the market still firmly lower than last week’s high. Last Friday also saw a sharp sell-off for no apparent reason in the index and given how far the market has rallied since the US election there are growing calls for a correction. The market printed another Hindenburg omen last night by fulfilling these three criteria:

• The number of stocks hitting 52-week highs and lows must both exceed 2.2 percent of the number of stocks in said exchange.
• Second, the McClellan oscillator — a measure of market breadth based on advancing and declining stocks — must be negative that day.

• Third, the benchmark index for the exchange must trade above its 50-day moving average.

The Hindenburg omen has received quite a lot of press coverage recently and whilst it’s historic hit rate is pretty poor – it has only been correct in calling corrections around 30% of the time – it did successfully call the 87 and 08 crashes. 

The US100 this week recovered around 50% of the decline seen last Friday at its highest point but price has since come under pressure again. 5643 is now a key support level to watch if the market drops once more with a break below here paving the way for further declines.

 

 The US100 remains vulnerable to further declines after last week’s sharp drop. A break below 5643 could see downside momentum accelerate