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Checking in with the volume experts over at Lowry Research Corp., it appears that U.S. stock market buying power hit a new rally high last week, while selling pressure hit a new low.
That reflects the same pattern of expanding demand and contracting supply that has characterized the entire rally out of the March 2009 lows - a rally that's now one year old.
According to Lowry analysts, if you look back over the past eight decades, every major market top has been preceded by a sustained period of rising supply and falling demand as profit-taking becomes increasingly aggressive.
That reflects the same pattern of expanding demand and contracting supply that has characterized the entire rally out of the March 2009 lows - a rally that's now one year old.
According to Lowry analysts, if you look back over the past eight decades, every major market top has been preceded by a sustained period of rising supply and falling demand as profit-taking becomes increasingly aggressive.
And that's not all. If you look at the six-month stretch that precedes a market top, advance/decline (A/D) lines have always deteriorated for at least six months before a major top. At the moment, by their measures, the U.S. market remains in the first phase of a long-term uptrend, which is the lowest-risk period for new buying after a bear market.
To better understand what we mean, take a look at the following chart:
For still one more measure of selectivity, take a look at the number of stocks making new highs. Historically, that number peaks a year or more before a major market top. At the moment, the number of New York Stock Exchange stocks making new highs is near a new high itself.
This looks "peaky," but I would rush to note that it's mostly because last year's highs were so low they are not hard to beat.
Although the long-term picture is still positive, in the short-term stocks are pretty overbought.
On March 5 - two Fridays ago - we saw what amounted to a 90% Upside Day, with Big Board "up" volume at 93% of total volume. Following a 7.8% advance off the Feb. 8 low, the Lowry analysts point out that this could have been the sort of "panic-buying" attack that sometimes occurs at short-term peaks.
[Editor's Note: As this stock-market analysis demonstrates, Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.
It will take a seasoned guide to uncover those opportunities.
Markman is that guide.
In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.
Subscribe to Strategic Advantage and hire Markman to be your guide. For more information, please click here.]
News and Related Story Links:
To better understand what we mean, take a look at the following chart:
For still one more measure of selectivity, take a look at the number of stocks making new highs. Historically, that number peaks a year or more before a major market top. At the moment, the number of New York Stock Exchange stocks making new highs is near a new high itself.This looks "peaky," but I would rush to note that it's mostly because last year's highs were so low they are not hard to beat.
Although the long-term picture is still positive, in the short-term stocks are pretty overbought.
On March 5 - two Fridays ago - we saw what amounted to a 90% Upside Day, with Big Board "up" volume at 93% of total volume. Following a 7.8% advance off the Feb. 8 low, the Lowry analysts point out that this could have been the sort of "panic-buying" attack that sometimes occurs at short-term peaks.
[Editor's Note: As this stock-market analysis demonstrates, Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.
It will take a seasoned guide to uncover those opportunities.
Markman is that guide.
In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.
Subscribe to Strategic Advantage and hire Markman to be your guide. For more information, please click here.]
News and Related Story Links:
- Money Morning Week Ahead Column:
Bulls Overcome Market Tug of War to Send Stocks off to Strong March Start. - Lowry Research Corp:
Official Web Site. - Money Morning Investment Research Report:
A Year After the Bear-Market Bottom, Investors Must Still Pursue Profits - Without Ignoring Risk. - Investopedia:
Advance/Decline Line. - StraightStocks.com:
Lowry's Buying Power Index Nudges Record 1933 Low. - eHow.com:
How is Stock Buying Power Calculated?
Tags: Lowry Research Corp., Stock Market
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