A Few More Hopeful Indicator Signals
Key points:
- The character of the market changed recently, with several breadth, interest rate, and price action warnings
- Nevertheless, as long as the major indexes hold above their longer-term averages, investors and traders can look for favorable indicator signals
- Recent favorable signals have been flashed by industry group action, crude oil relative to gold, and consumer confidence
Industry % in Bear Market hits a key level
As the name implies, our Industry % in Bear Market indicator shows the percentage of 23 industries that are trading more than 20% below their 52-week highs. This is an important indicator of overall market health. Ironically, a rising trend can represent good news or bad news. When the percentage of industries that are 20% or more below their respective 52-week highs reaches a significant level, it means one of two things. Either a) the overall market is plunging into a broad bear market, or b) a serious intermediate decline may have just about run its course. Unfortunately, there is no way to know for sure which event is taking place solely from this indicator's action. We need confirmation or denial from other indicators, and from watching subsequent price action. Regardless, it is useful to know when this indicator crosses a key level.
The chart below highlights those dates when the 20-period moving average for the Indust

