Buyers' 1-2 Punch For Stocks
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Jason Goepfert
Published: 2019-06-06 at 10:31:08 CST
A one-two rally
The S&P 500 fell to a 50-day low on Monday, and the charts didn’t look good, but they hid a lot of underlying potential. Both Monday and Tuesday saw eager buying pressure under the surface, and Tuesday’s one-day jump in the S&P was the largest in nearly six months.
When the index saw such a big jump, and / or buying pressure was widespread, gains had a strong tendency to continue. Returns over the next 2 months were particularly impressive, especially the risk vs reward.
A crude bear
According to media reports, crude oil has dropped into a bear market. Ignoring the semantics, it has dropped 20% from a multi-month high that was less than 50 days ago.
Other times it quickly dropped 20% from a peak, it tended to keep dropping. But it was an inconsistent signal, at best, for stocks, the dollar, and bonds.
Emerging market recovery
The McClellan Oscillator for emerging markets has risen above 30 for the first time in months, after falling to a very low level. This kind of change in momentum in the stocks underlying those markets has led to further upside over the next month 7 out of 8 times.
Speaking of momentum
The 20-day Oscillator for the Nasdaq 100 fell to -60. The Backtest Engine shows only 19 days since 1999 have matched this, leading to a 6-month gain all 19 times.
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Related Posts:
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- Weekly Wrap for Nov 19 - Chinese tech, long-term breadth, Mid-Cap seasonality, rising commodities
- Short term breadth suggests a consolidation
- Gold and the dollar have danced like this only 9 times in history
- Nasdaq 100 McClellan summation index suggests higher prices
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The post titled Buyers' 1-2 Punch For Stocks was originally published as on SentimenTrader.com on 2019-06-06.
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