SmarTrend Statistics for January 11, 2010
In the first week of trading in the New Year, the number of Uptrends as a percentage of all trends shot up to over 78% from 72% the week before. Historically, markets have topped out in the low 80% range as buyers have difficulty finding stocks that are not overbought. We will watch this ratio of Uptrends to Downtrends closely, along with our other proprietary signals, to see if any potential correction in the market is forthcoming. In addition to the more than 300 new Uptrends last week, the percentage that are profitable (an indication of momentum) reached a near-peak level of more than 85%. Similarly, stocks in a Downtrend are just over 1000 in total number with only 56% in-the-money. With these figures near levels that have historically preceded short-term tops, we will watch for these indicators to coincide with other signals and should a warning signal be received, we will report it to you in our Morning Call newsletter. For now, we expect the momentum to continue as the Dow approaches 11,000 but with earnings season now upon us, we will also be monitoring the many earnings reports due this week for any signs that may give the market an excuse to pare some gains.
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