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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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

Last week's bullish percents are above and this week's are below.  Last week showed a number very nice 6% reversals to up trends, and this week that trend continued despite the rocky behavior of the market.  The figure below does not show a market suffering from a lot of weakness.  Although most of the indexes and sectors are in red downtrends, we've had two weeks of bullish percent upward shifts, and most have held at healthy levels above the 50% level. 

This past week has been the kind of period where the bullish percents are really important because the indexes only tell part of the story, and the bullish percents fill in some of the remaining details.  The indexes were weak while the bullish percents showed underlying strength.  Nothing says the that this trend isn't going to change next week, but for now, overall the bullish percents are supportive of the equity market.  For a more complete understanding of bullish percents there are a number of good books available, including "Point & Figure Charting" written by Tom Dorsey.  Some blogs I like to read on the weekend are Declan Fallond, TraderMike, Millionaire.

Below is a figure showing the status of the major indexes and sectors compared to their own 10-week and 40-week moving averages.  Every single one is above the 40-week average which is a fairly good sign that the market remains in an intermediate-term uptrend, while some show the added strength of being above the 10-week in a short-term uptrend.  When the market is in an intermediate correction, expect to see a number of indexes slip below the 40-week.  The healthy status of these indexes and sectors above their moving averages is a favorable sign for the equity market.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The chart below shows the NYSE new highs vs new lows.  The level of new highs is far below the very healthy level that existed prior to the Feb-27 sell off of equities, but with the average new highs above 100 it still indicates strength.  New lows are at a very low level consistent with the low levels that existed during most of the prior up trend in stock prices from last summer to early this year.  This also indicates market strength.  In general, the NYSE new highs and new lows index is favorable for the market.

The next chart shown below is the NASDAQ new highs/ new lows index.  It shows a trend that is weaker than the NYSE.  New highs have fallen well below the 100 level and are now in a range similar to the correction last summer.  The new lows show a bit more strength in that they are still at a reasonable level.  Since the NASDAQ has trailed the stock market for a number of years it isn't surprising to see it lag the NYSE in term of new highs and new lows.  I would rank this indicator as neutral at the moment.

The bullish percent trends for the NYSE and NASDAQ show the same pattern as the new highs/ new lows indexes.  The NYSE is showing an up trend in terms of the number of stocks on P&F buy signals, although well below the levels prior to Feb-27.  The NASDAQ is showing a weaker bullish percent trend moving sideways that looks more neutral.  However, both indexes are above the 50% level which indicates underlying strength, and both have rebounded along with prices off the lows of a couple weeks ago.  Bottom line, the NYSE and NASDAQ bullish percents are favorable for the market.

I'm a big fan of the OBV indicator because it combines the volume over a period of time and provides a view of volume that steps back from the day-to-day histogram that can get confusing... such as this past Wednesday where prices were down, and volume was up, but only by a small amount.  Do we consider Wednesday as a distribution day?  I'm not sure.  I do think though that there is strength in this market with the small and mid caps providing leadership.  The OBV is another way to see this strength in the smaller companies as the volume indicator continues towards higher levels.

One very big disappointment these past couple of weeks has been the semiconductors.  They held steady as the market sold off and showed weakness as the market strengthened.  My guess is that they will continue to trade in a contained range. 

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

Below is a look at the weekly trends of commodities.  The gradual and steady strength in commodity prices continues.  I believe this is favorable for commodity-related shares, commodity mutual funds and ETFs, and, at the moment, the overall equity market. 

Note that the Goldman-Sachs Energy index has now broken above the 40-week moving average.  The price of oil hasn't broken above yet, but is getting close along with copper.  (Lumber continues to be very weak, perhaps related to the weakness in home building.)

Commodities and the related shares continue to be the place to be in this bull market.  The out performance began back in early 2004, with a temporary pause last summer and fall, and has resumed this year.  Generally out performance and leadership by this area is seen as a negative for equities in general, but this bull market has thrived on it, at least so far.

The strength in commodities is partly due to a couple decades of under investment during the 1980s and 1990s, and the enormous world wide demand led by the emerging Asian nations.  But it is also due to the low interest rates in the US that bottomed in 2003, resulting in a plunge in the US Dollar. 

The continuing (but more gradual) weakness in the US Dollar continues to support the prices of commodities.  The trend in currency relationships has heavily favored Canada, Australia, New Zealand, and even the Europe and Britain, but at the expense of the Yen and the US Dollar.  Now, even the Yen is starting to show signs of some strength compared to the US Dollar. 

Three different looks at commodity prices are shown below via the three different commodity indexes.  The CRB is the most closely followed and reflects the substantial correction in energy last year.  It is still in a downtrend which should be respected until there is evidence the trend is broken, but the strength in the other indexes would suggest the CRB has been in a correction and is close to finishing.

Natural gas prices had a huge spike post hurricane Katrina, and have since settled back into the trading range.  The related stocks settled into a trading range as well during this period and have lately been looking strong. 

Changing topics ... below is a chart from VIX&More.  I recommend reading his post about this chart.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

I don't have much time again today so these comments will be brief.  I think the biggest story since last week is the continued weakness in the US Dollar.  The reaction to the soft wording from the Fed last Wednesday has not been favorable for the US Dollar.   The weak US Dollar is a concern because it translates into inflation pressues, and it is usually inflation that derails an equities bull market.   At the moment, I would have to say that the direction of the US Dollar is working to help equities because it points to a limit on any increases in short-term rates.  But it may very soon start to work against equities if it continues to drop and inflation pressures increase.

Another important chart is of 10-year rates.  This weekly chart shows 10-year rates right above a multi-year up trend line that is supporting higher long-term rates.  The secular, very long-term trend of the last 25-years is still intact which shows 10-year rates in a decline, but this chart shows the intermediate-term trend is up.   The 10-year rates peaked last summer and helped spark the strong equity rally.  If the support line holds and the 10-year rates start to move higher, it will take away a factor that has been supporting equity prices.  Because 10-year rates are at a reasonable level, particularly for this stage of a bull market, I think they are still supporting equity prices.  If they move too high, however, they will start to work against equities.

The chart below shows a subtle strength in the 10 and 30-year rates, and slight weakness in the 2 and 5-year rates.  This is normal for a late-stage bull market as inflation pressures gradually creap into the economy and bond investors start to favor the shorter maturities.   As mentioned above, eventually the higher rates work against equities, but for now rates at these levels are supporting equities.

The chart below shows the US Dollar working its way lower while gold works it way higher, and both are within their trading range.  A break of either index will be important.  The direction of the short-term rates will likely correspond with the direction of the others.  If short-term rates move lower, most likely the US Dollar will move lower and gold will move higher, and eventually, if the these moves are too large, equities will be impacted.

This chart shows that corporate bonds have not been impacted by the sub-prime news or the Yen carry-trades news, or any other factor undermining confidence.  If confidence does start to erode, then I would expect Treasuries to start to outperform corporates.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The NYSE short interest is still at a high level that is bullish for the equity markets.  After a three week selloff of stocks, and some scary headlines about the sub-prime mortgage market, it is to be expected that short interest would be at a bullishly high level.  But the short interest level that existed prior to the sell off was surprising because generally short interest declines with strong markets and increases with weak markets.  It seems like the Feb-27 decline was highly anticipated by the shorts, and this put a floor under that sell off so that the correction turned out to be quite brief.  Well now perhaps these short positions will start to decline as (and if) the market continues to firm up.  This will put the short-interest levels back in sync with its traditional inverse relationship with the equity market.  For now though, the chart below is very supportive of equities.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

I received a comment questioning this rally due to the lack of volume.  I tend to agree, but I thought that volume was weak in January 2006 and again in June 2006.  Both times the market continued to be strong.  The OBV isn't that great either for the NYSE, but OBV is hitting new highs for the MID and SML indexes.  Since there are doubts and mixed signals about the rally when looking at volume, maybe the thing to do is switch to the weekly moving averages for a different view of the market.  The moving averages are a fairly objective way to evaluate the market, and based on the figure below the market looks healthy.  Most of the major indexes have now moved above the 10-week average while never breaking below the 40-week.  That's a pretty strong, broadbased up trend.

The NASDAQ continues to lag the market as it has for a number of years now with only a few brief periods of leadership such as last fall.  For now, it appears most of the funds are flowing into the NYSE and AMEX, and away from the NASDAQ.

The Dow Industrials are lagging the market again as it has for a number of years, similar to the NASDAQ.  The more economically sensitive Transports are holding up okay while the Utilities continue to dominate.  Generally a market isn't led by the Utilities, or the AMEX, but this bull market is different as funds have flowed in the stable, high-dividend Utilites and the energy-dominated AMEX.  I think the attraction to the Utilities is due to the low long-term bond rates that make their dividends more attractive, and the large energy component of the utilities particularly related to natural gas.  But also Utilities are probably very popular with the baby-boomers about to retire who want their retirement funds in equities but don't want the risk of most stocks.

The MID caps continue to be the outperformer and the SPX the laggard, although the SPX relative strength has now pulled back to a support level.  A break below this level would confirm the trend, but holding above might indicate an opportunity developing.

Kevin's Market Blog made the observation that steel stocks didn't really correct along with the market selloff starting Feb-27, showing the incredible, continuing strength of the index.  This seems very bullish for steel stocks and the world economy, although there is a divergence developing in the RSI compared to prices.  Note the outstanding long-term relative strength in the bottom indicator.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

Occasionally I pick up IBD at the newstand near my home to read the first few paragraphs of the Big Picture column.  Yesterday was one of the occasions and it was a surprise to me to read that IBD has declared the equity market in a 'confirmed rally'.  Many of you are probably already aware of this, but I wasn't.   Then I read the same thing in one of my favorite online columns written by Martin Goldstein of Financial Sense.  He mentions that IBD has called a "confirmed rally" based on Wednesday's strong break out after an initial rally attempt the previous Wednesday. 

I didn't see it.  I was thinking that there would be a follow through of strong volume, not just slightly above average volume.  But I really respect IBD and their calls on the market so I'm paying attention.  Below is a chart showing the days that has led IBD to make their call.

Below I've shown the corresponding chart of up volume versus down volume, and commented on the Zweig 9-1 volume days that Mark Hulbert wrote about this past week and that I mentioned in an earlier post.  So now we have the Zweig 9-1 signal and the IBD confirmed rally signal placing the market back into an intermediate uptrend.  In addition, we have the very nice looking W bottom pattern, and the strong break above short-term resistance and above the very important 50-day moving average.  So that I don't get overwhelmed with bullishness, I will keep in mind the nasty looking down volume on 3-4 days of the brief correction that we had. 

I believe that the IBD call was made on the NASDAQ stats while the Zweig signal was made on the NYSE stats as shown below.  

The Zwieg and IBD signals have me very encouraged while the down volume still has me a little worried.  Is anyone else worried about this down volume?

The chart below goes back to 1992 where the up versus down volume data in Stockcharts.com begins.  In terms of downside volume, Feb-27-2007 was not a good day for the equity markets.  Any comments on this would be appreciated.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

Last week's bullish percents are above and this week's are below.   Some nice upward reversals are shown, most notable is the move by energy stocks.  This area was very strong this week.  This bull market since 2004 has been led by energy, commodities and small caps, and that pattern appears to be resuming after a break in that leadership in the second half of last year.  What I find most encouraging for the short-term trend is that the major indexes and sectors corrected down to the neutral area, but have held above the 50% level.

For a complete understanding of bullish percents there are a number of good books available, including "Point & Figure Charting" written by Tom Dorsey.  Some blogs I like to read on the weekend are Declan Fallond, TraderMike, Millionaire. 

Market Watch featured an article this week by Mark Hulbert that discussed Marty Zweig's bullish indicator of two days of 9-1 up volume.  Hulbert mentions that we recently registered another of the Zweig signals, similar to the signal received last summer, and that signal worked out quite well.  As with all signals of this type, there is no guarantee it will work again, or as well as it did last time, but it sure is encouraging to the bulls and not a good sign for the bears.  But also note the gigantic down volume over up volume shown on Feb-27 not mentioned by Hulbert, along with the high down volume on Mar-5 and Mar-15.  How does that impact the Zweig signal?

Below I have tried to better illustrate the favorable 9-1 up volume days.  The total volume on these days was decent but not enough to notice unless the up versus down volume is compared.  I really like the W pattern and the nice clean open above short-term resistance with follow through during the day on Wed Mar-21 (Fed day).   Also there is a nice close above the 50-day moving average.  Now it would be nice to see it hold and consolidate above these levels, and then register a high volume follow through day above the recent highs.

John Murphy recently mentioned how important the financials are to the market at this point.  Not only does this sector lead the SPX, but it also reveals the underlying health of the market as the mortgage nervousness plays out.  This week the financials provided a very encouraging signal as it bounced off the lower monthly up trend line on high volume.

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

This has been a strong week for the equity markets.  The markets are attempting to launch another up cycle, and we're now all on watch looking for the follow through that confirms the new trend.  The follow through means we are looking for the major indexes to have another day or two of strong price gains with solid supporting volume.

The volume this week was decent, but wasn't as supportive as it could have been leaving a mixed signal.  Regarding momentum indicators, the daily charts show good momentum signals, but the weeklies still show momentum is working against equities such as the sell signals of the weekly MACD.  Breadth indicators such as new highs/new lows are healthy.  New lows are at a level that is supportive of the market.  New highs are healthy although below the levels of the market before the Feb-27 sell off.  

Below is a chart similar to the one shown by Carl Swenlin of DecisionPoint that he published in the Stockcharts.com newsletter.  I thought it was such a good chart I decided to try it out myself and add the RSI indicator.  John Murphy has shown a number of charts similar to this one as well.  I always like these basic views of the market that filter out everything except the basic trend.  The chart shows that the best strategy in this bull market has been to be in equities and stick with them during the intermediate cycle corrections.  Carl mentioned that his strategy is to have more sensitive indicators to help him know when to be defensive during the corrections, but to stay bullish and avoid shorts as long as the 10-week is above the 40-week moving average.

The Buy/Write charts below show nice looking W base patterns along with breaks above the moving averages.  I still am a little suspicious of this market because it hasn't taken much time to build a strong base to launch the next up cycle. 

The new highs/new lows are clearly favorable for the market.  With only 10 new NYSE lows you have to be encouraged.  New highs are picking up and look healthy although still below the prior up trend levels.

The bullish percents are bouncing off their lows and trending higher with the market confirming the higher prices.  The NASDAQ looks a bit weaker than the NYSE but that has usually been the case in this bull market.  This chart along with the new highs/new lows are supportive of the market, but it is early yet.  Some sideways consolidation over the coming weeks would not be at all surprising.

The OBV of the NYSE has bounced off the lows but is not yet breaking out above the recent highs, while the OBVs of the mid and small caps indexes are looking really good.  The small companies are leading the way again. 

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 Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The general, gradual strength in commodities continues and I believe this points to economic growth and is supportive of equity prices in general.  There is some concern though within the commodity trends regarding the headline commodities such as food and gasoline prices.  These have been very strong lately and have a large impact on the consumer outlook.

Below are weekly charts of the industrial metals.  These are used to help evaluate the world economic strength.  All three are moving very nicely in a constructive sideways consolidation pattern.  In general, the wider the consolidation, the more powerful the eventual break.  Usually prices will break with the pre-existing up trend, but there is always the possibility it is a topping pattern and prices could break below.  Shifts above or below the moving average give the first indication regarding the eventual direction of the break.  I believe that if these prices break above then it is generally a favorable sign for equities because it indicates worldwide economic growth, and is very helpful to the commodity producing economies such as Canada, Austrialia, Russia and many South American countries.  If prices run up too fast and too high, however, it becomes an inflationary problem and eventually will work against equities.

The chart below is showing the gold mining shares are finally starting to show a little performance with the XAU:GOLD ratio turning up.  The ratio has a ways to go before it proves much, but this is a good sign for investors interested in the precious metals shares.  On Tuesday we showed that the US Dollar dropped below an important support level, and this is helping the precious metals, along with the current speculation that the Fed may be less inclined to raise rates.