Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Six Measures of Market Internals


Some indexes may enter bullish phase.


As investors ring in the old year, trading volume should remain light until battle-weary traders return after the holidays. Ergo, not much weight should be placed on market movements during this "thin" period; the S&P 500 Index probably won't deviate much from its 3-week trading range.

Click to enlarge

Investors won't not only be hung over from 2008's financial rout, but will also be grappling with the vital question: What's the most likely direction for the stock market?

I've analyzed a number of fundamental and technical considerations in my recent articles, including After the Rate Cut, Tide Turning for Stocks? and Stock Markets in No Man's Land.

Additionally, breadth indicators are also useful tools to assess the inner workings of the market's rallies or corrections, and are discussed in this article. These indicators are used to identify the strengths or weaknesses behind market moves, such as the rally since late November - i.e., to assess how the bulls and the bears are exerting themselves.

First, a quick review of the stock market scoreboard. The MSCI World Index and the MSCI Emerging Markets Index have improved by 18.7% and 21.9% respectively since the November 20 lows. As far as the US markets are concerned, the Dow Jones Industrial Index has gained 14.8% since the low, the S&P 500 Index 18.4%, the NASDAQ Composite Index 17.8% and the Russell 2000 Index 25.3%.

Click to enlarge

Although the MSCI Emerging Markets Index and the Russell 2000 Index now qualify as being in new bull markets (at least in terms of the traditional definition of a 20% rise), all indices still have an exceedingly long road ahead to regain start-of-year and top-of-bull-market levels.

The table below shows the key resistance and support levels for the major US indices. After having flirted with their respective 50-day moving averages earlier in December, all the indices are again at these resistance levels. The next targets are the November 4 highs, followed by the key 200-day average (not shown on table). On the downside, the December 1 (not shown) and all-important November 20 lows must hold for the uptrend to remain intact.

Click to enlarge

< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos