Risk appetite for stocks isn’t slowing. It’s accelerating.
It’s funny… I keep hearing people talk about “signs of a top” everywhere you look.
But when I actually do the work and go through the charts, I’m seeing the exact opposite.
Where are all these supposed warning signs? Because the charts aren’t showing them.
Just this week, the NYSE Composite Index – which tracks every stock that trades on the world’s most important exchange – broke out to fresh all-time highs.
After moving sideways for nearly 10 months, it finally looks ready to run again:
Upside market participation among stocks is increasing, not decreasing.
The list of stocks making new highs keeps getting longer, not shorter.
The list of stocks in uptrends keeps growing, not shrinking, which is what you’d actually expect at a market top.
Nearly 67% of stocks listed on the NYSE are trading above their 200-day moving average. This is a quick-and-dirty way to quantify how many stocks are in “uptrends.”
Two-thirds of them, as it turns out. That’s the most all year – and, again, the list keeps getting longer.
I’ll be visiting the New York Stock Exchange this week. I say it every time: It’s one of the most beautiful buildings in New York City.
I’ve got some meetings with a bunch of traders flying in from around the country. I’ll send some pics.
For now, just remember…
This is not weakness. This is strength. And it’s still building.
This Week in Everybody’s Wrong
On Monday, we talked about the most important group of stocks on the planet.
Semiconductors were trying to do something they hadn’t been able to do: break out to new all-time highs on an equal-weight basis.
Here are the key levels to watch…
On Tuesday, we described how the American consumer is the engine driving the U.S. economy.
So it gets my attention when the equal-weight version of the Consumer Discretionary index is hitting new all-time highs.
Here’s what I mean when I say, “Sector rotation is the lifeblood of bull markets.”
On Wednesday, we went even deeper on rotation.
Have you ever compared the equal-weight S&P 500 to the traditional index?
Rotation is the heartbeat of every bull market – and not just some of them.
On Thursday, we talked about how the Dow Jones Industrial Average had just made a new all-time high on an equal-weight basis.
We don’t fight Papa Dow around here, not anymore.
And new highs are characteristic of uptrends.
On Friday, we learned that the American Association of Individual Investors (AAII) survey showed more bears than bulls for the third straight week.
Stocks are ripping to new all-time highs, but investors don’t believe in the rally.
Good… The smart money is still buying stocks.
On Saturday, we welcomed back Quantitative Analyst Grant Hawkridge for a deep dive into our NOW Score system.
Grant is the engineer behind everything we do here.
Here’s Grant on the benefits of process and structure.
Have a great Sunday.
We’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs