Saturday Bullish Percents
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 |
ECRI has declared that a recession is a sure thing. Their inflation gauge is contained indicating a low level of inflation ahead. Their indicators look out 4-6 months or so.
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.
I'm seeing lot's of green which is encouraging for future prices. The fact that the SPX, INDU, TRAN have broken above the 50% level is a favorable sign. This is also still good field position for an intermediate rally to begin. If this rally is for real, the bullish percents will eventually be skewed to the right and remain there while the market slowly advances. However, that will represent a riskier time to buy.
A few weeks ago the commodity indexes all corrected lower by 10% or so, and I thought it was time for the related stocks to take a back seat for awhile. But now the market leaders are the same old commodity-related producers we've seen lead the market for a long time. Energy, Material, Industrials.
If there is a recession someone forgot to mention it to investors pouring money into the leading industry groups. Coal, steel, chemicals, metals...and computer hardware? Are these the industries that lead in a recession? How many companies buy new computers when they are facing a recession and a meaningful downturn in their business?
The idea for the chart came from reading Connie Brown. She does quite a bit of work with the 14-period RSI and believes the support levels of the RSI are as important as the support levels in the price indexes. This chart certainly shows a critical RSI support level for the long-term trend of the SPX. Looks like we have just experienced a correction similar to the 1987 stock market crash, or the Volcker or Bush recessions.
I'm the guy that suggested monitoring McClellans quite awhile back.
I understand and sympathize with your bullish bent. My suggestion here is to play devil's advocate and ask yourself what scenarios might spoil your outlook, and are there any tried and true technical indicators that don't jive with the bull case.
Keep up the good work.
Jim (Comment this)