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 |
The ECRI future economic growth index had a slight decline this week, but the smoothed trend is off the lows and pointed higher even though it is at a weak level that is similar to levels in past recessions.
The ECRI future inflation gauge ticked lower as well. It is within the area that indicates reasonable levels of inflation ahead. I'm sure you are laughing at that, but honest that is where it stands. I think the commodity inflation is being offset by very powerful defationary forces such as inexpensive labor producing finished goods, lower home prices around the world and low rates in the US, Canada and Japan.
Trim Tabs was shaken out of their very bullish stance on the market down to a very cautious level a couple weeks ago. Now they are seeing a rebound and are back to a fully invested but unleveraged position. Not sure how much longer I'll have Trim Tabs reports.
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.
Not a single shift lower for the bullish percents, with the market broadening out very bullishly and plenty of stocks still at buy levels. It is very bullish my opinion to now see all the major indexes following the market higher such as the small caps, NASDAQ, AMEX and Wilshire 5000. Granted the leaders are now overbought and can't continue to support the market, so these other groups will have to carry the load of pushing the market higher, and that seems to be happening impressively.
The Canadian Stock index is making its move. The index was down along with a pullback in the Canadian Dollar due to aggressive rate reductions that generally matched the USA. Now both the Canadian equities and the dollar appear to be gathering strength. Canada's rebounding strength along with the fact that it is a huge commodity producer inspired me to take a long term position in EWC.
Another intriguing foreign market is Japan. I'm beginning to hear more bullish comments about a rebound there, but I haven't yet looked into it and don't have a position. Japan's foreign commodity dependence is a concern though.
The high quality, high growth IBD stocks are over 80% P&F bull signals which I take as a strong confirmation of the trend in equities rather than an overbought and ready for a correction signal. I'm not buying this group though, and prefer to stick with funds and ETFs along with a longer term buy and hold strategy.
It is nice to see the alt energy group and pollution control groups finally headed higher. They've remained at a low bullish percent level despite their relation to the price of oil. Perhaps it was a contrarian signal for higher oil prices that people weren't yet buying alt energy. Nuclear stocks are starting to strengthen a bit again.
The defense group is one of my favorite long term secular industries and it has gathered strength again.
I got shaken out of my intermediate term holdings too early based on some spikes in the new lows. Now the new lows have settled down, the new highs are strengthening and the bullish percents are confirming so I'm back to bullish with money deployed again. My major concern is the overhead resistance of the 200-day for the SPX, and the gap resistance overhead for the NASDAQ. Also, although the NASDAQ has improved, the new highs and new lows are still inverted which doesn't usually occur in an uptrend.
As I mentioned, this group is showing some strength. I like the bullish divergence, the W pattern, the down trendline break and the break above the first level of resistance. I keep reading about large numbers of nuclear plants being built or planned around the world, plus I'm sure the existing plants all need upgrades after years of neglect. These stocks had big runups, then huge selloffs. So they are not without volatility, meaning a dollar cost strategy for me.
