Upward Market Trend Continues

At the end of each week on my blog Financial Tides I like to analyze what the market did by using several ways to evaluate the trend. There is some tracking error in each method which is why I like to use several and then compare the results of each to get a consensus. I use BarChart to get all my data.

Value Line Index - This is an arithmetic index of 1700 stocks followed by Value Line. I like an arithmetic index because it duplicates the way most individuals purchase stocks. You buy 10 or 20 stocks with equal dollar amounts of each. Professionals and mutual funds might weight by market cap but most individuals don't.

• This week BarChart used 12 technical indicators and the VLA was a BUY in 12 of 13 indicators with only one HOLD
• The Index was tracking above its 20, 50 and 100 Day Moving Average (DMA)

BarChart Market Momentum - This week BarChart followed 6000+ stocks and determined how many traded above their Daily Moving Average (DMA)

• 85% above the 20 DMA
• 87% above the 50 DMA
• 90% above the 100 DMA

This is very positive and was above the percentages for last week and last month.

BarChart New High/ New Low ratios - I take how many stocks hit new highs vs new lows for various time periods. A number 1.0 or greater shows an upward trend.

• 20 day H/L ratio - 1635/204 = 8.0
• 65 day H/L ratio - 1167/50 = 23.3
• 100 day H/L ratio - 1047/35 = 29.9

Clearly there are many more stock hitting new highs than new low so that is a very positive sign.

Summary: All my indicators are in the same direction - UP. The Stock Market appears to be having a short, mid and long term trends all in the same upward direction - I call a CODE GREEN and would continue to BUY into this market.

I'd like some feedback to find out is this analysis is helpful to you. Please feel free to make comments below.

Comments

[Pauly B:]

Your right the signals point bull market for now technically. There are a few things that concern me though and why I keep my stops tight.

1. The market continues to pull away from all the moving averages. Eventually these moving averages will "tug" the price action back to the moving average. This is the correction we are all looking for.

2. The next earnings season and the forward language these companies use will likely move the markets more than they have this fall.

3. Technically the market to watch for the equity market is the FOREX markets to watch that dollar action. Right now all of this move is tied to our weaker dollar.

Sep 21 09:33 AM

[David Van K...:]

I think this is a good gathering of data from different sources. By your interpretation of it, you seem to be a trend trader. Be forewarned: Many on Seeking Alpha are counter-trend or trend-ignorers, so reaching "up" conclusions from data like this often will reap a ton of ciriticism. Many think we're in or approaching a bubble, and to quote one typical comment as an example, "it is insane to be long in this market right now." I'm in your camp, I like to look at what's happening right now and for sustainable trends.

Sep 21 09:39 AM

[Firebird400:]

Useful would be a look at past comparisons to your present data, e.g., how have your metrics reacted prior to past bubble bursts. How will it define code red? Will it do so in time to be useful? Look forward to more on this.

Sep 21 01:19 PM

[Jim Van Mee...:]

By tight stop losses I hope you are using the 50 DMA. Tighter than than can cause premature execution.


On Sep 21 09:33 AM Pauly B wrote:

> Your right the signals point bull market for now technically. There
> are a few things that concern me though and why I keep my stops tight.
>
>
> 1. The market continues to pull away from all the moving averages.
> Eventually these moving averages will "tug" the price action back
> to the moving average. This is the correction we are all looking
> for.
>
> 2. The next earnings season and the forward language these companies
> use will likely move the markets more than they have this fall.
>
>
> 3. Technically the market to watch for the equity market is the FOREX
> markets to watch that dollar action. Right now all of this move is
> tied to our weaker dollar.

Sep 21 07:19 PM

[Jim Van Mee...:]

David: No one is right all the time, that's why I always have protective stop losses at the 50 DMA. Sure as can be I'll be on the beach in Cancun or a biergarten in Wurzburg when the next bubble breaks but my stop loss will save my assets.


On Sep 21 09:39 AM David Van Knapp wrote:

> I think this is a good gathering of data from different sources.
> By your interpretation of it, you seem to be a trend trader. Be forewarned:
> Many on Seeking Alpha are counter-trend or trend-ignorers, so reaching
> "up" conclusions from data like this often will reap a ton of ciriticism.
> Many think we're in or approaching a bubble, and to quote one typical
> comment as an example, "it is insane to be long in this market right
> now." I'm in your camp, I like to look at what's happening right
> now and for sustainable trends.

Sep 21 07:22 PM

[Jim Van Mee...:]

Firebird: Go to my blog at financialtides.blogspo.... On the left hand side under resources I have links to 6 model portfolios I've run on Marketocracy for some time. You'll see how the indicators kept me out of trouble and told me when to get out and sit on the side line or go short.


On Sep 21 01:19 PM Firebird400 wrote:

> Useful would be a look at past comparisons to your present data,
> e.g., how have your metrics reacted prior to past bubble bursts.
> How will it define code red? Will it do so in time to be useful?
> Look forward to more on this.

Sep 21 07:25 PM

[Jim Van Mee...:]

"needs to go lower" I'm not to sure. The market in my view needs to go lower when P/E ratios are unreasonable. I still think they are low at the present time


On Sep 21 05:54 PM usethefed wrote:

> market still overbought. needs to go lower
>
> hat tip to tinyurl.com/n854tt for the good articles

Sep 21 07:27 PM