The next leg up
Posted by Danny on November 14, 2016
Stocks performed a major turnaround last week and are breaking out to the upside. Chances are good that markets will keep rallying into year’s end. Here is the current Nasdaq chart:
The October highs are likely to offer some resistance. But all my indicators have turned up from major lows. And there is further room to rise. We will also start a new lunar green period later this week. A climb towards 5400-5500 is a reasonable expectation. A revisit of the 5000 level would not look good. If that happens we will have to re-evaluate the picture.
The number of bullish stocks in the S&P 500 is also back above 300:
This number had been signalling weakness since late August and was stuck in a downward trend. We would want to see this number get back above 400 (=80%) if this rally is for real. That’s also what we had in February and July. A drop back below 250 (=50%) bullish stocks would put question marks behind the bullish thesis. When there are important changes in this indication I usually post them on Twitter, as I recently did here: https://twitter.com/lunatictrader1/status/791993232792092673