Broader global markets have rallied substantially since the start of the new cycle. The NYSE Composite has advanced 14% from October 4th (Chart 1), the EURO 100 has climbed over 11% and many Asian indexes have jumped 12%-17%. But is this the start of a new bull market or just a rebound rally within a longer bear trend?

One gauge of the market strength is the number of stocks rising within an index. Markets require more than half of the securities within their index to be advancing before a sustained bull market can occur.

Currently there is only 22.49% of the stocks on the NYSE trading above their 200-day moving average. In comparison, the deep mid-2010 correction saw the percentage dropped to 32.44% only to quickly rebound back to a bullish 50%-60%.

The present 22% in the NYSE is similar to the levels seen in the second half of 2002. World markets bottom later that year and in early 2003.

Bottom line: The broad based NYSE Composite requires a higher percentage of rising stocks before a new bull market can develop. The present level of 22.49% indicates the current rally will wade as the vast majority of stocks are still declining.

Investment approach: Investors may wish to remain on the side lines until evidence indicate that there is is enough supportive strength for a new bull market.

More market research will be in the upcoming November newsletter.

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).

Donald W. Dony Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.