The Nasdaq index continues to show relative strength in this market. However, the ongoing price advance is taking place on the deteriorating market internals. In fact, the internal weakness has only gotten worse as of late as the market has gone higher. When it will matter is something none of us know.
When comparing Nasdaq’s Advancing – Declining Issues indicator alongside NDX, we see that the market has formed two negative divergences during the last several weeks (two red lines on the chart below). The first divergence, however, hasn’t led to any substantial negative effects on the Nasdaq index. In fact, NDX continued moving higher despite the obvious bearish divergence. Will the ongoing market’s internal weakness be shrugged off as well?
ADQDC vs NDX, 15m