Solid market gains

Look past the headlines and evaluate the market with data

By Jim Van Meerten Apr 2, 2010 11:29AM
Ever weekend on Financial Tides we do a market wrap-up. It's not the weekend yet but since the market is closed for the Good Friday holiday my weekly market barometer report is a day early. I use the data on Barchart to find objectively what happened in the market. I use 3 different yard sticks because over the years I've found that no single indicator is 100% effective all the time but if you look at the market in several logical ways you might be able to look past all the headlines and figure out for yourself how to approach your investing in the future. Let's see what my yard sticks reveal.

Value Line Index -- Contains 1700 stocks so it's much broader than the S&P 500 or the very narrow Dow 30 -- Positive price momentum
  • Up 3 days out of 4 for a net gain of 1.16% last week
  • If the Index were a stock it would have an over all 88% Barchart buy rating, hitting buy signals on 11 of 13 technical indicators
  • Hit new highs in 12 of the last 20 trading session and 3 for 5 recently
  • 30 day price appreciation of 6.91%
  • Tracking above its 20, 50 and 100 day moving averages

Barchart Market Momentum -- Approximately 6000 stocks -- Percentage of stocks trading above their 20, 50 and 100 day moving averages -- Above 50% always good -- Market improving

  • 20 DMA -- 64.97% closed above -- 65.03% last week
  • 50 DMA -- 82.49% closed above -- 79.08% last week
  • 100 DMA -- 81.61% closed above -- 78.77% last week

Ratio of stocks hitting new highs to new lows for various periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- Bullish for all 3 time periods

  • 20 day ratio of new highs/new lows -- 1362/501 = 2.72
  • 65 day ratio of new highs/new lows -- 856/147 = 5.82
  • 100 day ratio of new highs/new lows -- 794/109 = 7.28

Next week's investment strategy -- A rising tide floats all boats. It's easier to have a portfolio of winners if more than 50% of the stocks are rising than it is to find winners when more than 50% of the market is sinking. Just a little common sense. Next week I'll prune out the stocks that aren't maintaining a price above their 50 day moving averages and won't be afraid to replace them with rising stocks.

 

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

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