Saturday Bullish Percents
All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | ABOUT | CHARTS | AFTERTHECLOSE | MON - Sector Strength | TUE - Interest Rates | Wed - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents |
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 |
There was very little movement in the Bullish Percents this week, and that isn't surprising for a low-volume, holiday period.
The Transports shifted lower again and is clearly an area to avoid. The chart below shows the price strength for the Transports has been huge for this bull market that began early-2003. So the question is whether the current weakness is a well-deserved correction within a strong long-term up-trend, or is it a divergence with the rest of the market providing an early signal of trouble ahead.
The Financials shifted higher and is the area currently supporting the market because of its large weighting in the indexes. It makes sense that as money is moving away from some of the weaker areas that it is moving towards this last area of strength. However, at its current level there is very little room to advance further, and once the momentum begins to stall it is hard to see what other areas can begin to lead.
Bottom Line: The Bullish Percents are well into the overbought zone where momentum stalls and the market churns in a topping process leading to an intermediate cycle correction.
