SmarTrend Weekly Statistics for February 1, 2010
The total number of stocks in an Uptrend fell by nearly 700 last week putting the percentage of stocks in an Uptrend at just over 57%, down from nearly 72% the week before. Several weeks ago we noted in this column that the percentage of stocks in an Uptrend and those that were "in-the-money" had reached levels that normally preceded short-term tops. That prediction came to fruition as the market had trouble finding new stocks to by with so many companies already overbought. That condition is in the process of correcting itself with the number of "in-the-money" Uptrends now down to 62.8% (compared to 66.5% last week and 81.7% the week before). Similarly, stocks now indicated by SmarTrend as being in a Downtrend have vaulted higher in term of absolute numbers (2064 vs. only 1372 last week) with the percentage of stocks now "in-the-money" (defined as trading below SmarTrend's Downtrend Alert price) up to 85.1%. While this level is near where we would expect an oversold bounce, our historical studies show that longer-term bottoms tend to occur when the percentage of stocks in an Uptrend, relative to all 5000 stocks tracked by SmarTrend, reach the 20% range. Since we are still at 57%, there is further room to the Downside as sellers have not completely exhausted themselves. We will be watching for these events which will be catalyzed, in part, by the daily economic and earnings reports and will report our findings to you in our daily Morning Call newsletter.
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