Let’s not mince words here. The pullback shall continue.
On a price momentum / relative strength basis to cash, the stock market has shown it’s highest momentum reading since the beginning of my datapoints in September 1989. Even higher than the days of the tech bubble. Ask yourself, “is this warranted?”….then feel free to chuckle or chortle to your hearts content.
See, this rally is simply overdone, due to our CEO-in-Chief’s newly found “financial magic” and short-sighted investors misguided and unfounded optimism. All things come to an end, especially this recent bear market rally.
Soon, we will get a healthy dose of reality again.
The market sentiment numbers reflect this:
NYSE Weekly Bullish Percent: 72%….the daily BP dropped to below 70% yesterday. It was at 74% last Friday.
NYSE Percentage of Stocks Above 10 Week MA: 84%, and falling now.
S&P 500 Weekly Bullish Percent: 72%. It has now fallen to 66% as of yesterday.
Nasdaq 100 Weekly Bullish Percent: 78%, down from 83% last week.
Nasdaq Weekly Hi-Lo Index: 78%, and falling.
Percent of NYSE Stocks Trading Above a 10 Week MA: 84% and falling, down from a 91% reading on Tuesday.
Percent of Nasdaq Stocks Trading Above a 10 Week MA: 78%, falling from 83%.
Typically, an intermediate term “correction” doesn’t end until the readings are somewhere south of 30%.