Last week SPX made new highs fraustrating bears and giving the bulls extra confidence to scream "RECOVERY". While these new highs look bullish, NYSI which is a longer-term breadth indicator has failed to make new highs.
Since the rally off the March lows NYSI has lead the advance, making new highs with the market. But there has been a bearish pattern when the market makes new highs and NYSI fails to do so.
In June when the market made it's first move down, SPX made new highs while NYSI trended lower. This lead to almost a 50pt drop on SPX. This same pattern happen again in August, although the move down was shorter. You can see the pattern in the chart above.
Of course there will need to be a confirmation of this pattern and this would require at least two down days for NYSI, or a break of 1000. So watch the markets breadth, if the negative breadth picks up it would confirm this pattern.
