Moneytree

S&P 500 Financial Sector at Key Inflection Point

A under followed indicator that has proven reliable is the percent of NYSE stocks on a P&F chart buy signal. The strongest buy signal is when the percent of stocks on buy is less than 20%, not exact but in the 20% range. The strongest sell signal is when 70% are on a buy signal. The historic high was in January of 04 at 78% and again in April. The historic low was October 08 when only 4% of the NYSE stocks were on a buy. Most recent highs were at 74% in 12/06 and 4/07. The extreme movement starting 12/08 at 10% and topping out at 66% took a little over two months and was followed by a move lower to 14% in just two months. The most recent up move started at 16% this past March and reached 74% in a little more than two months. Starting in Sept. 08 this once slow moving indicator has turned volatile with huge moves in a short time period.
earning the title of most extreme move ever. The percent now is 68%. In the past it would take months to see a 20% change.
At 68% the market is bull confirmed but at historic highs that recent past has shown lead to sharp reversals, 64% is a reversal. Bespoke Investment Group has a blog on the Russell 1000 stocks with highest short interest, sign of things to come?
To put is simply, this is an indicator of who is in charge, buyers or sellers.

Sell the News, Buy the Rally

Hi Steve,
You couldn't have said it better, right on.