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Market Rally Arrives Right On Time (Finally) at Trader’s Narrative

Let’s do a quick review of this week in the markets:

New High-Lows Indicator
I mentioned on Tuesday, the High-Low Indicator had fallen to less than 5%, flashing a bright red light signal for an inflection point. Last time this indicator had pinpointed a swing low almost to the day so I was naturally listening when it talked.

It is too early to give a definitive answer but it looks like this new signal is also good :-)

Percent Above Moving Average
For both Nasdaq and NYSE securities, the percent of stocks above their 50 day moving average dipped just shy of the magical 20% threshold (20.59% and 20.65% respectively, to be exact). There’s nothing really magical about the 20% level in as much as it has tended to be the level at which a rout in the market ends and a new rally begins.

Today’s amazing bull run comes at just the right time:

  • it fits the “Santa Claus” rally many are expecting
  • it fits the year-end seasonality
  • it fits the oversold readings from the two indicators I mentioned

Dec 2007 market rally

Take a look at this week’s sentiment overview for some really eye popping information. You don’t want to miss this!

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