Skip to main content

Stocks tired or getting ready to flex their muscles?

I spent a big part of the weekend working on the soon to be released major update to the TradeRadar software. As a result, I fell behind on the usual weekend blog posts. What follows then, is a combination of our Weekly Review and the Weekend Winners and Losers where we announce the weekend's free stock signals available at Alert HQ.

Today we have the following stock picks and signals:
  • Based on daily data, we have 14 Alert HQ BUY signals and 8 SELL signals
  • Based on weekly data, we have 11 Alert HQ BUY signal and 6 SELL signals
  • We have 100 Bollinger Band Breakouts based on daily data and 396 Breakouts based on weekly data.
  • We have 727 Cash Flow Kings
  • 13 Swing Signals -- 2 BUY signals and 11 SELL Signals
  • 951 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 156 stocks that are new additions to the list and 108 that fell off the previous list.
  • 20 Trend Busters based on daily data of which 18 are BUY signals. We also have 41 Trend Busters based on weekly data.
  • 120 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 49 downside gaps and 71 upside gaps based on daily data. We also have 69 Gap Signals based on weekly data.
The view from Alert HQ --

Though the general tone of the Alert HQ signals is still fairly bullish, there are creeping signs of slowing momentum. When we can only find two Swing BUY signals, that implies most stocks have already started trending positive. When the Trend Leaders list gets up around 1000, it often suggest a short-term top in the market is approaching.

Our moving average analysis shows a similar story. In the chart below 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).


This analysis shows that there is still room for further gains based on the fact that we are still below some of the peaks that were registered last year. On the other hand, we are now at the same level where the most recent peak was followed by a noticeable correction.

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.



In this chart the number of stocks in strong up-trends is at a high and the number of stocks in down-trends is at a low. We're seeing a strong bounce-back in this indicator as stocks recovered from the recent correction. The question, of course, is whether stocks can keep up this kind of momentum.

Since we scan most of the stocks and ETFs in the market, I generally like to look at the Vanguard Total Market VIPERs (VTI) to see how performance of this ETF stacks up. In the chart below, I have three indicators that show how strongly over-bought stocks are.


You can see RSI, Williams %R and Slow Stochastics are all at extremes. Can they remain at these extreme levels for much longer? They can!

You can also see in the chart of VTI that stocks have just surpassed the January highs. This could be the beginning of another leg up. There could easily be rotation out of sectors that led the way up from the bottom of the recent correction into those sectors that have lagged. That would allow many of the statistics tracked at Alert HQ to stay at extreme levels. Decent economic performance has been supporting stocks on their way up and that dynamic could continue. Furthermore, that January high now gets to act as a support level.

In the charts above, however, I've juxtaposed the S&P 500 SPDR ETF (SPY) against the data I've compiled.  Our friends over at MarketClub have provided a video that reviews the S&P 500, showing how we got to where we are today and why caution is an appropriate sentiment. Watch the video now!

Conclusion --

Given how over-bought most indicators are, stocks could pause at these levels. Weakness, I think, will be brief and stocks will flex their muscles again. There's still room for more gains and the market will again show the kind of strength that has allowed ETFs like VTI to rebound to new highs.

(Thanks to Graphics Factory for use of the image)

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. 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)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

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 to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…