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Below is a weekly chart of the intermarket.  Bonds have essentially been moving sideways for quite a while, and there are some who feel that the resulting low long term rates we've enjoyed is the key to the success of the economy and equities.  Commodities have been consolidating in their own sideways movement after a huge run higher.  A break above the range would probably confirm some worldwide economic strength, but would probably also correspond with US Dollar weakness and perhaps a break to historic lows.  The economic strength would be welcome but the Dollar weakness would be worrisome.

The chart below is the same intermarket but with a monthly, 25-year timeframe.  This chart shows the SPX near its former highs.  Reaching this level is an important and favorable milestone for equities, but is also a level where resistance is expected and the trend in equities may pause.  If the SPX touches this upper resistance level, there is a chance it just may occur at the same time that commodities break above their trading range shown in the weekly above, and when the US Dollar breaks below lower support.  This could be an important point in the intermarket relationship and could work against equities, at least for a short time.

The chart below is a weekly borrowed from John Murphy showing the relationship of foreign equity markets to the US equity market.  Both have performed very well, but the ratio chart shows foreign markets in a consistent trend of significant outperformance of the US Market.  Murphy sees this outperformance as the result of the weak US Dollar.

Below is another weekly chart borrowed from John Murphy showing a different view of the same relationship of the US Dollar and the Dow World Index vs the US Wilshire 5000.   Not much strength showing in either.

Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments 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 sixth 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.  It is a little worrisome that the small cap Russell 2000 and the NASDAQ bullish percents have not yet switched to uptrends, creating a bit of a negative divergence.  Perhaps these are areas that will be pulled higher by the momentum of the rest of the market in the coming weeks.  The major sectors of the market are all above the 70% level showing broad participation in this bull market.  This is a very healthy characteristic.  Finally, REITs are back in the uptrend after participating briefly in the real estate scare.  The subprime issue still exists and is important, but, at least for now, it is no longer pulling down any stocks related to real estate or lending.

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 NASDAQ showed several days of excellent volume, although prices didn't advance much and was probably held back by the overbought nature of the broader market.  The market could use some consolidation to work off overbought conditions, and if that happens the lagging areas of the market such as the NASDAQ could benefit in the next leg up.  However, my view is that the market is in the risky stage where all the good news sucks you in just when you should be more cautious with your portfolio.

Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments 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 |

The investor surveys show there is still a degree of skepticism out there towards the market, and the short interest levels are certainly favorable towards the market.  But a number of other technical indicators show the market is overbought short-term, so I think some caution is advised.

A look at investor sentiment is shown below in a diagram of four investor surveys. 

The individual investor survey is unchanged, and the bloggers shifted a tiny bit higher.  Individuals have been skeptical for a number of months and this has been favorable for stocks from a contrarian sentiment view point.  The bloggers are always skeptical, and insist on being on the wrong side of the market.  Their skepticism is also favorable towards equities from a contrarian sentiment point of view.

The newsletter survey is more important than the others.  It is just slightly lower this week showing a little concern about the surging stock market, although the level is towards the bullish end of the range.  This sentiment survey is a tough call and probably neutral towards equities when viewed as a contrarian sentiment indicator.

The survey information above can be obtained for free via the following sites.  Investor's Intelligence is from Market Haromics.  Individual Investors and Market Vane are from Investment Tools.  Blogger Investors is from Ticker Sense.

Regarding Market Vane, this is a survey of futures commodity advisors and is used by futures traders.  The publisher states that it is best used as an indication of the current short-term trend, with the idea that investments in futures should be in line with the trend.  So this survey has to be viewed separately from the others.  For additional information about market sentiment, I recommend a blog by Brent Leonard.

Sentiment analysis is an important component when following the markets, and is considered a “contrary” indicator.  Contrary because if too many people are bearish then there aren't enough sellers left, the balance tips to buyers, and the market starts to advance.  If too many people are bullish, most funds are already invested, the balance tips to sellers and the market weakens.  One way to determine if investors are bearish or bullish is by taking surveys and tracking at what levels these polls indicate investors are at the extremes of bearish or bullish sentiment.

Keep in mind, sentiment analysis is not a science and only provides very general information.  Sentiment is not a signal to take action, but provides background about the current state of the markets.  For instance, there have been many occasions when bullishness reached high levels well before the market started to weaken.

NYSE short interest is at record levels... highest in over 10 years.  High levels of short interest is generally regarded as quite bullish for contrarians.  All those shorts are betting against the market and at some point need to buy back stock, and the way the market is surging it seems those shorts are covering their positions like mad already.  See the story in this link.  Below is another view of short interest.  I tried to show that in the past when short interest was at current levels the market took off higher.  No guarantee that will happen again, but this is quite favorable towards stocks... maybe not short-term, but more so for the intermediate and long-term cycles.

I'm getting a little bored with my same old charts, so below is a slightly new look at the put/call ratio.  The peaks in these put/call ratios clearly correspond with the market sell offs, but the lows aren't quite as clear.  But what is clear is that contrarian sentiment is steadly working its way to lower levels that is not as supportive of equities as in March. 

Below is another look at the two put/call ratios.  I like this view but the moving averages of the ratios seem currently out-of-sync with prices based on the past cycles.  

I like to check in with the VIX at least once a week, and right now I think it is a little worrisome.  Generally, I think if the market is trending higher then the VIX should be generally trending lower.  Right now the VIX is choppy and at a level higher than late Feb even though the market is at new highs.  This isn't right, although I don't know how important it is.  My conclusion is that the sentiment shown by the VIX is working against equities at the moment.  For better analysis, check out VIX and More.

Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments 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 |

The market is partying right now with almost everything going its way.  But the overbought indicators remain in place so caution is needed.

This chart below is getting boring but it serves its purpose well.  Most of the various commodities are above the 40-week average and headed higher in a solid uptrend, but at a pace that hasn't scared investors away from stocks and hasn't raised red flags yet at the Federal Reserve.  These strong uptrending commodity prices correspond with the uptrend in commodity-related stocks, the relatively low short and long-term interest rates and the very weak US Dollar.  At the moment, the US stock market is thriving on the world-wide economic strength indicated by higher commodity prices, and therefore the trend in commodities continues to be supportive towards overall equity prices.

Usually the price trend of the shares of commodity-related stocks will move in anticipation of the trend in the price of the commodity being produced.  If that rule hold true, the recent strong break out of natural gas shares is signaling future strength in natural gas commodity prices.

We're having this wild commodity, inflation, weak dollar, low interest rate party, and gold shares decided not to come.  Gold is usually the life of the party when commodities are surging, and yet the companies the mine for gold are about the only companies not celebrating at the moment.

The two weak currencies, the Yen and US Dollar.  All other major currencies are strong.  Japanese short-term interest rates are something like .25%, yet the US Dollar is even weaker than the Yen as shown by the ratio chart.

Sorry these charts are a bit out of order.  The gold mining shares are moving sideways and will soon reach a point where they either break out above resistance, or just by moving sideways, they'll break below the lower uptrend support line.

More US Dollar weakness and its impact is shown below.  The US Dollar weakness parallels the weakness of the US stock market compared to the world stock market.

Disclaimer: All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and accept full responsibility for any investment decisions you make. Questions and comments 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 |

The market continues to be strong but caution is called for because the market is somewhat overbought.

The NYSE bullish percent marches higher, nicely confirming the new price highs.  The NASDAQ bullish percent lags the NYSE but is also generally moving higher in a supportive manner.

The chart below shows the very nice looking bottom and break out price pattern developed by the NYSE.  Currently prices rest on the short-term uptrend and present one of the first tests to the trend line.  A break here might indicate some short-term weakness, but this index is still a healthy level above the 50-day moving average.

Two views of the volume for the small caps are presented below using the OBV indicator.  This indicator tends to lead prices and there is some small cap weakness developing as OBV is now pointing down and is right at its 50-day average.  The longer term view is also present below to show a better perspective.  There was a false signal last winter which shows the OBV needs to be considered along with other indicators.

The SOX broke out very nicely today shown below in the first chart which is the daily shorter-term view.  Let's hope the strength in the SOX continues and can lead the NASDAQ higher.  The longer-term view in the second chart shows the SOX trading within a range for a number of years, so the real test will be when prices approach the upper level of the 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 Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

Short and long-term interest rates continue to be stable and therefore supportive of equities.  The US Dollar has been steadily sinking and will at some point create inflation pressures, but for now the weak US Dollar doesn't seem to be harming the equity market.

Below is a picture of short-term 3-month T-bill rates, along with the US Dollar, Gold and Equities to show their relationship.  It looks as though the peak in short-term rates coincided with a low in equities, weakness in the US Dollar and strength in Gold.  Short-term rates are now in a trading range that appears to continue to be favorable to equities and Gold, but is not helping the US Dollar one bit.

Two words come to mind when I look at the chart below, "Yikes" and "Gulp".  This chart is a 25-year monthly chart of the US Dollar Index.  The optimist would look at this chart and see a US Dollar opportunity since it found very important support near to current low levels in the past.  The pessimist will probably see what I see which is a lot of US Dollar weakness and the worrisome implications of inflation and foreigners buying up US assets. 

The chart below is a measure of confidence and health in the credit market.  If the Dollar weakness, economic slowing, sub-prime worries or any other issue were really impacting the market, I think we'd see the Treasuries begin to outperform the corporates.  That hasn't happened but let's keep an eye on this and any other signs of serious weakness underneath the market.

Ditto the above regarding the Financials sector.  The subprime scare is not yet behind us, but it is nice to see this index springing back to life.  That huge high-volume sell off sure was scary (is scary), but as long as this index remains within this upward channel, or at least maintains important support levels, its another indication that the economy and markets are okay.

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 |

I don't have much time this morning, so these comments will be brief.  Most of the charts below are ratio charts used to determine performance against the broad Wilshire 5000 index.

Last fall the market developed a pattern where one index or sector would outperform for a while, then the strong groups would pause while investors turned to other areas that had lagged eventually pulling most areas of the market higher.  This may be happening again as the Industrials index was a strong performer this past week trying to catch up to the rest of the market after having approached a support level.  The Transports continue to look strong but are at a short-term resistance level, and utilities have been strong outperformers for a number of weeks, but may now be ready to take a breather.

Maybe soon it will be the NASDAQ's turn to outperform for at least a short time as the NYSE and AMEX have been the stronger indexes.  The AMEX looks like it may be ready to take a break, and the NYSE may find resistance at a prior pivot high. 

A few weeks ago I noted that the SPX ratio had declined to a level where it might find support, and it has turned up a bit this past week.

I included the chart below just a reminder that this parabolic market remains a concern.  It is very extended and overbought, and there may be another sharp correction that has the potential to pull other indexes lower as well.

I've kept my eye on this index because it has so significantly underperformed other areas.  If it turns up it has the potential to be a leader.  Last week there was a break out above the trading 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 Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |

The NYSE Short Interest is at its highest level in years, which indicates a very high level of investor fear.  Investors are clearly aniticpating that the market will decline, and therefore NYSE short interest is favorable towards equities from a contrarian sentiment point of view. 

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.

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 |

The sentiment surveys, the put/call ratios and the VIX are providing mixed signals.  Also, stocks are generally short-term overbought by a number of technical measures.  Caution is warranted towards the market.

A look at investor sentiment is shown below in a diagram of four investor surveys. 

The individual investor survey shifted higher by quite a bit this week, and the bloggers shifted a tiny bit higher.  Individuals are fickle and undecided lately about this market as their sentiment shifts up and down, but they have generally tended towards the skeptical side for a number of months and this has been favorable for stocks from a contrarian sentiment view point.  The bloggers are always skeptical of the market it seems, and I would really love to know why since they are a well informed group.   Regardless of why they insist on being on the wrong side of the market, their skepticism is also favorable towards the equities from a contrarian sentiment point of view.

The newsletter survey is less volatile than the others and more important.  It is higher this week and approaching the red, overbought level signaling a level of bullishness not seen in the newsletter writers in a while... since early January I think.  So looking at this survey as a contrarian, the newsletter bullishness is at a level that is starting to work against equities.

The survey information above can be obtained for free via the following sites.  Investor's Intelligence is from Market Haromics.  Individual Investors and Market Vane are from Investment Tools.  Blogger Investors is from Ticker Sense.

Regarding Market Vane, this is a survey of futures commodity advisors and is used by futures traders.  The publisher states that it is best used as an indication of the current short-term trend, with the idea that investments in futures should be in line with the trend.  So this survey has to be viewed separately from the others.  For additional information about market sentiment, I recommend a blog by Brent Leonard.

Sentiment analysis is an important component when following the markets, and is considered a “contrary” indicator.  Contrary because if too many people are bearish then there aren't enough sellers left, the balance tips to buyers, and the market starts to advance.  If too many people are bullish, most funds are already invested, the balance tips to sellers and the market weakens.  One way to determine if investors are bearish or bullish is by taking surveys and tracking at what levels these polls indicate investors are at the extremes of bearish or bullish sentiment.

Keep in mind, sentiment analysis is not a science and only provides very general information.  Sentiment is not a signal to take action, but provides background about the current state of the markets.  For instance, there have been many occasions when bullishness reached high levels well before the market started to weaken.

The 10-day moving average of the equity put/call ratio has moved substantially lower from its peak in March.  It is currently at a level where it is displaying some confidence towards the market, although not excessive.  So it is at a tough level to read, but I think caution is called for at this point.

Checking in weekly with the VIX and where it is in relation to the market.  The VIX is currently trending down while the market advances which is a healthy sign.  However, the SPX is hitting new highs while the VIX is a distance above its prior lows, so this looks like a negative divergence.  For a much more thorough analysis, check out VIX and More.

I'm trying to come with another way to view the put/call in relation to the market.  Below I show the 20-day and 60-day moving averages of the equities-only and total put/call ratios, with the S&P 500 index in the middle.  I think this helps show the relationship of the highs and lows of the put/call to the equity index.  The CPC peaks certainly have been opportunities in the past, but the lows are a unclear.  I'm not sure exactly what the current levels of the put/call are indicating though.