Saturday Bullish Percents
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Red is a column of O's in a downtrend, blue is a column of X's in an uptrend. Below 30% is oversold, and above 70% is overbought. Yellow is a shift down, green is up. | INDEX |
The market has shown weakness over the last five days, and the Bullish Percents are starting to confirm the weakness with some shifts to downtrends and movement to lower levels.
The most important change from last week is the NDX which registered a 3-box reversal to a column of O's and a shift to the 60-level. This movement corresponds with the Friday close of the NDX index below 50-day moving average.
The Transports continued to show weakness from within the overbought level as it shifted to a 'bear confirmed' last week, and now this week shifted to the 60-level. Dow Theorists can't be happy with the Transports after three closes below the 200-day moving average and a solid non-confirmation of the new highs for the Industrials. For followers of Dow Theory, this signal is more than just a change in the intermediate trend that began last summer. A non-confirmation has implications regarding the health of the bull market that began with a Dow Theory confirmation signaled in 2003.
The Energy Sector and Industrial Metals Industry also signaled weakness this week. The Energy Sector shifted to a downtrend with a move lower to the 70-level. This is still a healthy level with over 70% of energy stocks with P&F bull signal, so a future shift below the 70-level will provide better information about the health of this sector.
Industrial Metals are known to be a barometer of economic strength, so this is an important area to monitor. The Metal industry shifted to a downtrend and dropped to the 50-level, and this may be an early signal confirming economic weakness.
In general, the Bullish Percents have held up very well in December and have solidly confirmed the impressive broad advances of the market that has included almost all sectors and industries of the equities market. However, the Bullish Percents are now showing just enough weakness to confirm that the market is in a topping process. Another push higher for the market is certainly possible for the indexes, particularly due to the favorable seasonal period, but the risk is of a general correction to the intermediate trend is now high.
