Thursday's strong bounce in the markets may raise some hope with investors of a recovery, but equity indexes still remain far too weak for the bull to return.

Stock indexes require 50% or more of their holdings to be advancing if a bull market is to develop. Percentages that fall into the 40% to 50% range generally create deeper corrections. However, when the percentages decline below 30%-40%, and remain low, then the bull market can be in jeopardy.

The recent percentage numbers indicate that the major equity indexes are still remaining very weak.

The NYSE currently has only 20% of its stocks trending up. The S&P 500 has less than 19% advancing and the TSX has almost 31%.

Bottom line: The percentage of stocks that are rising on the NYSE, S&P 500 and TSX presently remains too low for a bull market recovery. These percentages will need to advance above 50% if the bull market is to continue.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2011 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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