Why are markets struggling
Market have struggled to make progress in last 12 month. The reason is steady decline in number of stocks above their 200 MA. As of now only 25% of stocks are above 200 MA. In the middle of 2014 this trend started and it has continued to get worse. Each bounce has been lead by less and less number of stocks.
Some of the big component of the index is where the action is focused on. And some of those suffered big distribution days recently.
This is the backdrop to market which if it continues means there will be fewer big moves and more breakdowns. The implication is to be more selective and have small targets. And focusing more on anticipation so that you have better entries. Also the 25% of stocks still holding might start breaking down and could be focus for shorts.
A dramatic improvement in this trend will be required for a sustained breakout above recent highs.
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