Sunday, May 10, 2009

Weekly Market Commentary: Bullish Percents at Peak High

The Nasdaq Bullish Percent is likely to weaken next week (which will come with a sharp decline). However, this may not materialize into a longer downtrend but instead repeat the early part of 2007 where breadth diverged from the indices as it does now. The 2007 bearish divergence was an early warning to the troubles that followed - even though the Nasdaq rallied for another 9 months. The current bullish divergence for October-March lows between the Nasdaq and Nasdaq breadth suggests somethings similarly large could be in the works (on the bull side), even if the market makes another run on March lows.


The S&P Bullish Percents were finally able to break resistance which had long been surpassed for other breadth indicators. It was the last to do so.


The Percentage of Stocks above the 50-day MA is in rarified air and has the same strong bullish divergence at play.


As for the indices the Russell 2000 is soon to come up against 517 resistance


And the Nasdaq 100 is just a few points shy of 2006 lows


Take profits but be ready to buy again in a month or two time?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

 
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