Summary
If the stock market deteriorates (price, breadth, momentum) too much more, we might have to pull our bullish intermediate-term technical outlook. While the major averages remain near their all-time highs and have not yet shown a lot of deterioration or longer-term technical damage, they have suffered short- to intermediate-term damage that warrants at least a yellow flag. By way of examples, the S&P 500 (SPX) is back below its 50-day average, the five-day/13-day exponential moving average (EMA) crossover remains on a sell signal, the 21-day rate-of-change (ROC) is in negative territory, the SPX is below its middle daily Bollinger Band, the last two rallies have failed, and the daily Vortex indicator remains on a sell signal. The SPX has traced out two weekly and two monthly bearish momentum divergences. The weekly divergences go back to early 2024, while the monthly divergences go back to 2018. The last time we saw anything close to this length of monthly divergences was from May 1996 until August 2000. In addition, the weekly Coppock Curve has traced out a bearish divergence for the first time since the late 2020/late 2021 period — and that certainly did not end well. Breadth is melting down i