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The Bullish Percents have solidly confirmed the current market rally, but the current high levels indicate that investors need to be cautious.  The high levels in these Bullish Percents indicate a very strong, broad-based market, but also a heightened level of risk of a short-term market correction.

All but two of the important indexes being tracked are above the bullish 50% line.  The laggards are Precious Metals and Semiconductors.  The lagging metals partly reflect the correction from the parabolic spring highs, and the uncertainty regarding short-term rates.  The Semiconductors is an influential sector and the fact that it is lagging is one of the few remaining important worry spots for the market. 

Canada moved to a column of X and above 50%, Precious Metals moved to a column of X, and Materials moved to above 70%, all reflecting new strength in natural resources.  The Industrials sector moved to 80% and Telecom is at 100%, both now are considered overbought.  Financials showed a little weakness ticking down slightly below its peak, but still in a column of X.  Financials are very influential and also a leading sector and is therefore an important sector to watch for clues about the future direction of the short-term trend of the market.

Regarding the moving averages (MA), there is also broad-based strength confirming the market rally.

The Water industry just moved above the 39-week MA after forming a two-month base, although it is still below an important high consolidation which could be difficult resistance. 

Biotech is in a strong uptrend after breaking out of two-month base as well, but it is now at 5-year new highs with less resistance to hold it back.

Broker/Dealers have made a strong move up to the former highs of the past spring.  This tends to be another leading and influential industry and should be watched to see if it can confirm by breaking out above.

Grains continue to surge after breaking a 2.5-year downtrend reflecting the Australian and US droughts, and also perhaps the very long-term trend towards a generally rising level of world-wide commodity prices.

The most notable event of the week was the US Dollar failure at resistance of both an important resistance level and the 39-week moving average.  Not much chart damage has occurred yet, and the dollar could turn around and surprise with a move higher, but this failure should be watched carefully because of its very important implications regarding short-term rates, economic strength, commodity prices, etc.

Speaking of commodities, the Morgan Stanley Commodity Shares index just broke above the 39-week MA after forming a 3-month consolidation that touched the lows and bounced impressively three times.  The index is now at short-term resistance.

(Items are noted in black in the figures below as important to monitor because they are near their 39-week MA, either just below or just above.)

***All charts and comments are intended for educational and discussion purposes only. No investment recommendations are being offered.***