Market breadth momentum contonues to weaken as the S&P 500 grinds higher, setting up a bearish outcome similar to the early November 2015 top. As BofAML's Stephen Suttmeier warns a break below channel support at 1989 would signal an interim top.
The NYSE McClellan Oscillator is a breadth indicator that shows a negative divergence with price action. This indicator showed a bearish divergence with the S&P 500 from early October to early November that preceded the early November break below the rising channel from early October. This ended the rally off the late September low and was confirmed by a loss of the late August uptrend line in the McClellan Oscillator.
The pattern in mid-March is eerily similar to early November, as the McClellan Oscillator shows a bearish divergence with the S&P 500 grinding higher within the rising channel from February. A break below channel support at 1989 (rises ~6.54 points/session) and the late January uptrend line on the McClellan Oscillator could be the signal for an interim top in the S&P 500. Channel resistance is 2061.
Source: BofAML