![]() New Recommendation: “New Highs” buy signalĪs noted above, a new buy signal has been generated by the “New Highs vs. In summary, we recommend maintaining a “core” bearish position because of the downtrend line in SPX (and the negative seasonality), but we will continue to trade confirmed signals around that core position. At that time, a bullish seasonal factor will come into play, as institutions typically have cash to invest at the end of January. There is currently a negative seasonal factor at work – something called the “January Defect,” and it lasts through the 18 th trading day of January (Friday, Jan. Moreover, the construct of volatility derivatives continues to forecast a bullish outlook for stocks as well. The VIX “spike peak” buy signal has expired, but the trend of VIX buy signal remains in place. This new buy signal would be stopped out if new lows were to exceed new highs for two consecutive days.Īnd its derivatives are remaining bullish in their outlook for stocks - at least for now. NYSE new 52-week highs have numbered greater than 100 on each of the last four trading days, while new lows have been in single digits. New Lows” indicator has given a buy signal. ![]() new lowsįor the first time in about nine months, the “New Highs vs. It will just depend on when the next sell signal arrives. So, there is apparently no predictive value to the fact that the oscillator is extremely overbought. The market’s reaction after those two previous forays by the oscillator into dizzying heights was quite different: SPX continued on much higher after June 2020 but fell apart after August 2022. This general area of “extreme overbought-ness” has been reached twice before: once in June 2020 on the big rally after the pandemic selloff of March 2020, and again in August 2022. 18, these buy signals are still in place.Īdditionally, it should be noted that the “stocks only” breadth oscillator had become so overbought that it was near its all-time high. This was one of the most bullish indicators, but a failure of breadth could produce sell signals, so we will watch this situation closely. ![]() Being overbought can be a good thing when SPX is first breaking out on a new bullish leg. As a result, both breadth oscillators are on buy signals and both are in overbought territory. Market breadth has been extremely strong over the past two weeks.
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