Skip to main content

Reviewing the charts -- can this rally last?

If you're wondering whether the current rally has legs, I'd like to submit the following charts. They're derived from data collected during our Alert HQ process and they provide a high-level look at a couple of the indicators we track across the whole market.

The view from Alert HQ --

Let's start with our moving average analysis.


For this first chart we count the number of stocks above various moving averages and count the number of moving average crossovers, as well. We scan roughly 7000 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).

The yellow line has crossed above the magenta line. This is a clearly bullish development as the number of stocks above their 50-DMA has moved above the number of stocks whose 20-DMA is over their 50-DMA. We almost always see stocks advancing when this situation occurs. In addition, please note that well more than half of stocks are now above their 50-DMA which is a big improvement over the last couple weeks.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


With the red line plunging, we know that the number of stocks in down-trends has decreased rapidly. Conversely, the number of stocks in up-trends (the yellow line which has turned up after recently bottoming out) is clearly increasing.

The outlook --

These charts show that stock market gains have been strong and broad-based. These charts also show that stocks have not yet reached bullish extremes. Indeed, I keep reading that bearish sentiment is alive and well despite two weeks of decent advances in the stock market.

This leads me to think this rally does indeed have legs. It may not be a straight-line run to new highs but I'm feeling confident that stocks will see at least another couple weeks of solid gains. And that could get us to some new highs for 2010.
Labels:

Comments

Post a Comment

Popular posts from this blog

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.
Post a Comment
Read more

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what...
6 comments
Read more

Pick 'o the Month - a two'fer

Usually I focus on a single smaller, more obscure stock. In this case, I would like to submit two stocks, a large-cap, Cisco Systems ( CSCO ), and a small-cap, Big Band Networks ( BBND ). These two stocks embody a resurgence in the network infrastructure space. That theme is what ties these two picks together. With the rising tide of video, music and movies downloaded over the Internet and cable companies offering bundled TV, phone and Internet, we have finally absorbed the glut of network capacity created during the Internet bubble. This deluge of multimedia is changing service providers’ business models, and the ways they manage and develop networks. The focus now is on how to move, manage and monetize content that is richer and more complex than ever before. In response, as telecommunications companies ramp up newer, faster networks to handle all this traffic, Cisco Systems is a prime beneficiary. As the dominant player in network infrastructure, it has already seen profits begin to...
1 comment
Read more