Home Stock Market Commentary Why Weakening Stock Market Internals Don’t Signal A Market Crash – Mike...

Why Weakening Stock Market Internals Don’t Signal A Market Crash – Mike Swanson (08/23/2021)

Today markets are gapping up a little after taking a hit last week. Look for what is now a sluggish and dull trading environment for the overall market to continue.

Last week I put up a blog post that contains the most important material about investing and trading that I have ever put together, but the post failed to generate much interest, because my website stats show me that few people spent time looking at it and many clicked right off. There simply is zero interest in the content of it, but in case you missed it you can find it here. There is a reason no one talks about this type of information. It is a topic I myself will move on from, because it will cause the internet algorithms to think people don’t want my information.

As I have been pointing out for several weeks now, stock market internals are weakening and continued to do so last week. This is why it is becoming harder to trade most stocks and why so many fad stocks plays that make up the Robinhood top 100 most owned list and the holdings of the BUZZ and ARKK ETF’s are no longer working well, even though the S&P 500 made a new high two weeks ago. Leadership is now very narrow in this market and only a few sectors made a new high last week.

However, the weakness in the market internals doesn’t mean the stock market is going to crash, even if it is likely to continue for sometime. I show why in this update.

When stock market internals are going up with the market it is difficult to try to bet against individual stocks with short selling or put options. However, when internals are fading as they are now or forming a negative divergence against the stock market averages then one can make money betting against stocks weaker than the averages. This is something I am now doing with a portion of my money, mostly by short selling ARKK stocks as I explained in an update I did last week.