SmarTrend Statistics for January 25, 2010
Over the past few weeks in this column, we noted that the number of stocks in an Uptrend, as a percentage of all stock in our Global Portfolio, reached levels normally preceded by short-term tops. That prediction came to pass last week with the Dow having it worst weekly loss since March 2009, the lows of the bear market. The good news is that last week provided some relief to the acute overbought condition with the number of Uptrends falling by 10% to 3,470 in total and now representing 71% of all stocks, down from 80%. More notably the percentage of Uptrend stocks that are in the money fell from a very high 85% two weeks ago to just over 66%. Similarly, the percentage of Downtrend stocks that are now trading below our Downtrend price has jumped to near 82%, up from 55% a week ago. While we are expecting a technical bounce to play out early in the week, the question is whether or not last week's 4% move lower is a mere blip in an extended bull marker or the start of much deeper correction. As trend traders, we believe in letting the market telling us the answer rather than guessing. Currently, the market has support at the 1080 level on the S&P which is around the level the market hung around for much of November and early December. We expect that to get tested at some point. With the S&P now below the 50-day moving average, sellers and bears may get emboldened as those levels now become resistance and as buyers wince at every move by our appointed representatives in Washington. In addition, fourth quarter earnings reports continue to be released and analyzed. Please check our Morning Call newsletter each day for updates on our technical analysis of the markets and analysis on all the economic and earnings data that is fit to print.
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