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The following charts are derived from data collected during our Alert HQ process and they provide a high-level look at a couple of the indicators we track across the whole market.

The View from Alert HQ --

Let's start with our moving average analysis.

For this first chart we count the number of stocks above various moving averages and count the number of moving average crossovers, as well. We scan roughly 7000 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (NYSEARCA:SPY).

This chart shows the broad-based deterioration in the market. Almost 70% of stocks are now below their 50-DMA. The number of cross-overs to the downside has accelerated. I don't show it on the charts but roughly 75% of stocks have fallen below their 20-DMA, as well. We are midway between the extreme levels as we saw in March 2009 and the levels we saw during the two pullbacks in 2009.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

This chart tells a similar story. Current levels are midway between those seen at the market lows in March and during the pullbacks in September and November.

Conclusion - Why I'm Still a Bull

OK, I have to ask: should the market be sinking to levels last seen when the fate of capitalism was in doubt and the financial system was teetering on the brink? I don't think so.

So the interpretation of these charts is that the market is greatly oversold. Unfortunately, markets can continue in an oversold mode until some catalyst changes investor sentiment. Luckily, we continue to see modest progress in U.S. economic reports. Improving fundamentals will eventually carry the day. As I said a week ago: do not short this market unless you're a trader.

Source: Still a Bull Even with These Awful Technicals