Stock Market Technical Analysis
Click on image to enlarge
The past week we have seen a somewhat successful squeeze of the shorts to take the market higher. The problem is that at the levels we are at, we are very vulnerable to any negative news such as China's interest rate hike today. The chart I posted above shows the percent of S&P 500 stocks above their 50 day moving average. This year's huge spring rally peaked at the end of March at 93% as is shown in the top center of the chart. September's rally peaked at 93%. Examining this chart closely helps to understand how far we have come so fast and exactly where we are at now. Anytime this percent passes 90, typically major legs down in the market follow.
That is the voice of reason. Realize that the pressure on the fed to keep the market going higher right up to election day is tremendous. Once this election passes and the pre election market pump is over, everyone will be looking at this chart to see just how high we are. Just a little food for thought...