Saturday, June 19, 2010

The market is getting legs -- 6/18/2010

This week the market got some legs under it. Each weekend I go back to Barchart to get the data for my 3 market yardsticks. This help me clear my head of all the sensational headlines I've read during the past week and just look at the data. I use 3 because although they usually go in tandem they each measure the market in different ways so I think it gives me a more complete feel of what is happening. Let's see what they tell us.

Value Line Index -- Approximately 1700 stocks so it is much broader than the S&P 500 or very narrow Dow 30 -- Up for the week


  • The Index was up 2.51% for the week
  • The Index is up 1.13% for the month
  • The Index has been up 3 weeks and down 2 weeks
  • The Index closed Friday above it's 20 & 100 day moving average but below it's 50 DMA

Barchart Market Momentum -- The percentage of stocks closing above their Daily Moving Averages for various time frames -- Above 50% is always good

  • Friday over 76.73% closed above the 20 DMA -- only 40.92% closed above the 50 DMA -- 51.44% closed above the 100 DMA
  • Last week over 55.12% closed above the 20 DMA -- only 26.90 closed above the 50 DMA -- only 41.13% closed above the 100 DMA
  • Last month only 9.26% closed above the 20 DMA -- only 17.09% closed above the 50 DMA -- only 33.95% closed above the 100 DMA

Ratio of stocks hitting new high/new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- We've got some bullish signs here

  • 1 month ratio of new highs/new lows -- 1367/231 = 5.92
  • 3 month ratio of new highs/new lows -- 276/140 = 1.97
  • 6 month ratio of new highs/new low -- 237/94 = 2.52

Bonus Info -- Once a month the Conference Board publishes their Leading Economic Index -- The Leading Economic Indicators were positive .4%, Coincident Economic Indicators positive .4% and Lagging Economic Indicators negative only .1%. That's a great sign that the economy is in recovery.

Summary and Investment Strategy -- All three of my yardsticks have positive results and the Conference Boards Economic Indicators show the economy is in recovery. I'll still trim any under performing stocks but I intend to stay fully invested.

Jim Van Meerten is an investor who writes on financial matters on Financial Tides,Barchart Portfolio Blogs, Seeking Alpha, Marketocracy and MSN Top Stocks. Please leave a comment below or email JimVanMeerten@gmail.comDisclosure: No positions in the stocks mentioned at the time of publication

2 comments:

  1. S&P down around 7% since you said it was "getting legs". Do you think your data is a good indicator of where the market is headed? There have been plenty of signs in recent weeks (moving average trends, weakening economic data, etc) that the market would probably head lower.

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  2. That would be correct. I was wondering if you could tell me where you find out about these deals for market and such so you can post them on your site.


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