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.