SmarTrend Weekly Performance Statistics
With last week's more than 2% rally, the number of stocks in an Uptrend, as a % of all stocks in our global portfolio, reached over 83%. When this figure reaches north of 80%, that usually is a reliable indicator that a near-term top may be close and that a pullback is overdue. The rationale is that in order to propel the market to higher highs, investors and traders need stocks to buy. However, when so many stocks have already been bought and their prices driven higher, that leaves little left to buy and sellers will then tend to dominate the action as they outnumber buyers.
This phenomenon is clearly visible by the number of Downtrends now only 793 - indicating even some of the worst stocks in the marketplace have likely been bought and their prices taken higher. The winning % of our Uptrend calls is also now north of 90% with the average Uptrend now returning 47% - both figures above our statistical average and indicative that almost all stocks are being pushed to extremes. Can this continue? Sure, anything is possible in this market but when placing bets with real money, we advise caution on any new long stock purchases and to protect gains where appropriate. This market will take a breather and the longer it takes to do so, the greater the possible decline when it ultimately does. Being the last one to sell is also never a fun trading experience.
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