Thursday, September 17, 2009

The 2009 Rally - Breadth Without Compare

Yesterday I looked at Worden Bros. T21111, which measures the number of stocks trading at least 2 standard deviations above their 200ma. As you’ll recall, it was hitting an all-time high. (Data goes back to 1986.)

With Wednesday’s big rally, we are now seeing even more extraordinary numbers. Not only is T2111 up to 58.51%, but T2112, which measures the % of stocks trade at least 2 standard deviation above their 40-DAY moving average, is also in record territory. It is showing that a remarkable 57.19% of stocks are now stretched far above their 40-ma’s.

The action in T2112 truly exemplifies the uniqueness of the rally since March. Below is a long-term look at the indicator. Note that from 1986 through 2008 the highest reading this indicator ever registered was 37.22% in November of 2004. That record has been blown away repeatedly over the last 6 months.



Let’s now zoom in on this year to better see what I’m saying.



There simply is no comparison over the last 23 years to what we are seeing in this recent rally. There have now 5 distinct periods in the last 6 months where T2112 has rallied through the old high. And now we’re seeing the most extreme breadth numbers of all.

3 comments:

Matt Nardone said...

Thanks for your breadth analysis. I have been curious as to the long-term chart of breadth as it spans through multiple bull/bear markets. Your chart shows recent uncharted territory. I have a chart which shows how many symbols are hitting new topping signals on the homepage of dowcrashes.com. It parallels with your extreme activity in recent months. This chart, I call the T%X100, took on a new radical form around July 24th. Very interesting, and not a good harbinger for a new bull market.

Matt Nardone

Joe said...

Hi Rob!

The overbought percentage is not a surprize to me at all.

I do not expect a sudden market crash, at least not untill the government intervene in the markets so heavily.

It was a very good investment on their side to push lets say
500B into the market and with that pushingh Up the total equities of the US stock market by more than 3000B $ in 6 month.

On the oter side this High level of breath tells me that most of the major market partcipants betting on general dollar weakness to be continued, and that pushes Up all kind of stocks, be weakwer or stronger indiscriminatelly.

Wehther they will be truely successful to inflate the country out of debt is another question. I don't think so.

Joe

epileptikitty said...

I'm seeing a fair amount of capitulation on the bear boards I read.

How is your CBI index doing? Last March I ignored it to my sorrow...

Challenge word: shaileth