• Chartist Corner: The Most Important Chart For The Bulls

    by  • July 23, 2013 2:50 pm • Broad Market Analysis, Chartist Corner • 2 Comments

    I love to see strong internals, suggesting things are healthy.  Think about it, if many stocks are going higher, that improves the odds of the rally.  One major knock with the 2007 peak, before the financial crisis, is many stocks stopped going up.  The overall indexes did, but less stocks did.  That was a big warning sign.

    Well, fast forward to today and I think things still look rather healthy for this surprise Summer rally to have legs.  Here is one of my favorite charts, it is a cumulative sum of the NYSE Advance/Decline issues.  In fact, it very well could be the key chart for this entire bull market.

    When this goes up and makes new highs, it shows a lot of underlying strength.  That is strength you wouldn’t know about by just looking at a chart of the SPX.  Well, it just cleared the May peak and now we want to see some separation, but this is a very good sign for the bulls.

    Sure, we could have a huge drop at anytime.  But to see this many stocks confirm the move to new highs, it shows this is a rather healthy bull market and one that very well isn’t done yet.


    Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in 2003 and is a frequent speaker and writer on stock market and economic issues and is widely sought after by financial media for his expertise and commentary. Mr. Detrick is a common guest on CNBC, Fox Business, and Bloomberg Television and has been quoted in outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, the Associated Press, and others. With a decade of financial industry experience in the investment and financial services area, strengths include short-term trading with an eye toward timely technical- and sentiment-based trading opportunities, and advanced option trading strategies. Mr. Detrick received a BA in finance from Xavier University, an MBA in finance from Miami University, and has earned his Chartered Market Technician (CMT).


    2 Responses to Chartist Corner: The Most Important Chart For The Bulls

    1. rk
      July 24, 2013 10:48 am at 10:48 am

      Ryan, But when you look at May, that also marked the short term top. What tells us that this time it’s not a top or close to a top? Just curious!

      • Ryan Detrick, CMT
        July 26, 2013 10:12 am at 10:12 am

        Great question. The simple answer is we don’t know. Not the answer you wanted, but the truth.

        For me, I want to see the A/D above breakout to new highs and pull away from the May peak. That would be a good sign for me. If it fails here, that’d be a big concern.

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