We wanted to circle back on this indicator and see where it stood today. As of 3/9, the number of stocks up 50% in a month was again flashing major overbought readings. In fact this is only the 3rd time since 2010 that this indicator has reached over 50. The other 2 times were Oct. 28th and 31st of 2011 and that was after the European debt crisis bear market. The rally from the Oct 4th bear market low peaked in the short-term on Oct. 27th. But after the Oct 27th peak the S&P 500 corrected a quick 10.4%. It then went on to rally almost another 23% from the end of November 2011 until April 2012.
The current market has shown some similarities to the 2011 environment, particularly in its breadth thrusts up and down. If things happen to play out like 2011, the current market is most likely closer to a short term top from which we'll see a pullback before resuming higher at some point later in the year.
2011 S&P 500
We'll see if stocks can continue to shrug off these short-term overbought readings and continue their march higher. Have a great week.