The market is continuing the second upleg of a cyclical bull which commenced 3/09.
The SP 500 is at best only mildly overbought short term. It is significantly overbought on an
intermediate term basis at a 12.7% premium to the 200 day m/a.
Over 90% of "500" stocks are trading above their respective 200 day m/a's. In a cyclical
upleg such as now, the 90% ratio can continue for an extended period of time. Confidence/
complacency as measured inversely by the VIX volatility index is at a cycle-so-far low of
17.3 The chart below shows that when the % above 200 day m/a for the composite ($SPXA200R)
is quite high relative to a cyclically low VIX, you need to pay extra attention because it can
signify that an extended rally is growing ever more mature, in that increasing confidence is
well reflected in the price action of the market. Chart.
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