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. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
This is the fifth week in a row of impressive shifts higher by the bullish percents. This indicates that the price strength of the major indexes is being confirmed and supported by broad participation of the stocks tracked by the indexes. However, many of the bullish percents have moved above the 70% overbought level, and it indicates that some caution towards the market is now called for.
Last week's bullish percents are above and this week's are below. The NASDAQ continues to lag the other indexes and the bullish percent hasn't shifted back to an uptrend despite such impressive strength in the rest of the market. This past week was really big for the financials as they bounced back in a big way from their prior high-volume sell off, and the bullish percent confirmed that move. Participation by this group is essential in a healthy bull market.
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.
The chart below shows a very nice uptrend that began with some important high-volume accumulation days marked in green. I'm turning cautious on the market due to the number of technicals that are overbought, but I wouldn't turn bearish unless there was something in the charts that indicated a downturn was taking place. For me, turning cautious means limiting new purchases, taking some profits, raising cash a little, raising stop levels... but essentially staying in the market with an eye out for signs of a downturn developing.
The volume shows a general pattern of accumulation even though there have been a few distribution days.
Lot's of investors have been very worried by the sub-prime mortgage news, but this week contributed towards moving that concern down a level. The Mortgage Finance index found important support and is decisively above the 50-day average. It may be a number of years before there is much strength in the Home Builders index, but it has shown some hopeful recent strength. The REITs haven't budged, but then the index didn't show much weakness either. This index has been extremely strong for a really long time, and could easily continue to correct well within a longer-term uptrend.
