2010 In The Can

 Since this week's weekly charts are virtually identical to last week's, and since I missed yesterday's  usual market internals post, I thought today I would look at the percentage of stocks above the 50dma, both short and long term. Here is the last 6 months of the Nasdaq. We are currently at 64.9%, safely above the 50% that typically separates bullish from bearish positions, and in fact have not been below 50 since the market followed through in early September.

 Here is the last 3 years, which is as far as you can go on a Stockcharts free chart.Unfortunately, the last 3 years is all bear market, so it is a little difficult to draw conclusions. I have been using 70 as the "overbought" level, that is, when over 70% of the stocks on the Nasdaq are above the 50dma, you can start looking for a correction. Con versely, 30 seems to be the "oversold" level; if we go below it, it is time to start looking for the market to rally. Above 50 means the market is in rally mode. If we go below 50 and stay there fpr more than a couple of days, then it is safe to say we are in a correction. Judging by where we are now, barring a humongous crash on Monday, we are probably a good week or two from any meaningful drop.

 Here is the NYSE, which, due to the presence of so many ETFs, probably has slightly different levelsthan th Nasdaq. In the 6 month char above I raised the upper line to 75, which looks about right. Here, again, we are safely in bullish territory and rising.

I think it was either late 2007 or early 2009 when the bulk of the ETFs moved from the AMEX to the NYSE, so that will effect any historical comparisons, The upper line is probably near 75 but could be as high as 80, the middle line could be up to 55, and the bottom line, at least here, looks like 30. I will look at the period 2004-2007 when I get the chance, to ee how a bull market compares to what we have seen for the last 3 years.

2010 is in the can, and it was full of surprises. Fortunately for me, I bought the 4th edition of O'Neil's book early in the year, and read it 3 times over the course of the year, so I did quite well this year, surprises or not.

I will have the new highs update shortly.