Thursday, April 7, 2011

Bearish Sign: Extreme Bullishness for US stock market

The latest Market Harmonics intelligence survey shows a Bull/Bear Ratio of 3.65, the highest ratio of the last 5 years.

See bull and bear charts here:

The 14-day Relative Strength Index (RSI) for the S&P 500 is around 60, if we pass the previous high of 1344 on the S&P500 with an RSI at 70 or over, it might be better to be prudent and decrease positions in stock that have outperformed worldwide, especially since the RSI has not gone below 30 since July 2010. Said that, we are not near the top of the channel we followed since March 2009.

Finally, I'll have a look on the percentage of stocks above their 200-day moving average with a chart from for $nya200r.

Currently 83.70 percent of stocks are above the 200 MA, this is not extreme, but certainly does not encourage us to buy stocks especially this has been around 80 for a while.

To conclude, if the S&P 500 reaches a new high this month, it is most probably wise to sell part of your investment in stocks and possibly industrial commodities be it ETF or other financial instruments.

1 comment:

  1. Also checkout Mish Shedlock article on extreme bullishness: