Info!! Assessing The Recent Stock Marketplace Pose Strength

Stocks moved smartly to novel highs inward the major averages this by week.  Sector rotation was specially noteworthy, amongst old leaders utilities together with consumer staples--defensive together with yield plays--falling behind together with to a greater extent than growth-oriented sectors--consumer discretionary together with raw materials--showing detail strength.  This reflects pull inward U.S.A. of America economical information together with an increased pricing of odds that the Fed volition stimulate to normalize involvement rates afterward this year.

The top nautical chart tracks the divulge of stocks across all exchanges making fresh three-month novel highs vs. novel lows. (Raw information from the Barchart site).  Note that novel highs accept been growing inward recent sessions, simply stay below peak levels seen inward 2014.  This reflects the fact that many sectors, such equally financials, energy, consumer staples, together with healthcare, accept non registered recent novel highs.  Still, I banking concern complaint that relatively few shares are registering fresh novel lows, an indication that buying has been broad-based.  Indeed, the bottom nautical chart tracks the Cumulative NYSE TICK--the cumulative upticks vs. downticks for all NYSE stocks--and shows consistent buying involvement from institutional players.  (Raw information from e-Signal). 

The 2nd nautical chart from the top is my mensurate of intermediate term marketplace strength.  It is a 10-day moving average of SPX stocks making 5, 20, together with 100-day highs vs. lows.  (Raw information from Index Indicators).  It has risen sharply inward recent sessions together with is close a momentum peak.  Note that it is non at all odd for this pull mensurate to top out ahead of cost during intermediate-term marketplace cycles, which way that nosotros could come across farther upside drift fifty-fifty if breadth moderates from here.

The 2nd nautical chart from the bottom shows the divulge of NYSE stocks closing higher upward their upper Bollinger Bands vs. those closing below their lower Bands.  (Raw information from Stock Charts).  It is really mutual for this mensurate to peak ahead of cost during intermediate-term marketplace cycles together with that's what has happened then far.  Note, however, that the Bollinger Balance--the divulge of stocks closing higher upward vs. below their Bands--has remained consistently positive inward recent sessions, reflecting the buying pressure level noted above.

So where does that exit us?  Here are a few observations:

*  We made a momentum depression inward mid-January, amongst the lows inward really early on Feb drying up.  From that point, nosotros accept embarked on a novel intermediate-term upward cycle, which is approaching a momentum peak;

*  Buying pressure level has been pregnant during this close recent upward wheel together with should proceed to propel prices higher, fifty-fifty after nosotros accept made a momentum (breadth) peak for this cycle.  We quest to come across selling pressure level from institutions stimulate to transcend buying pressure level earlier the electrical flow wheel is imperiled;

*  Despite fresh cost highs, many sectors are non making novel highs thence far together with stocks making novel highs are below 2014 levels.  I believe the electrical flow upswing is business office of a wide topping formation inward stocks together with non a fresh bull marketplace leg; a pregnant expansion of novel highs beyond 2014 levels would contradict that view;

*  In my electrical flow base of operations instance scenario, nosotros proceed to drift higher on upward buying momentum, simply ultimately volition top out together with supply to the belatedly 2014 trading attain equally business office of the market's broader topping.

This is a full general roadmap; a wide hypothesis rather than a difficult together with fast conclusion.  As always, I volition survive tracking the marketplace mensurate together with updating that roadmap.

Further Reading:  Views of Market Breadth
.