Five Bull Market Barometers (05-15-2020)

JC Parets
May 17, 2020

Earlier this month we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.

In this post, we'll update those charts without going into as much detail as to why they're important. So if you haven't read our initial post linked above, we'd encourage you to check it out.

With that said, let's jump in and see how these charts have developed since.

The percentage of stocks above their 200-day moving average remains subdued, at just about 7%. Our signal is when this indicator gets decisively back above 15%.

Click on chart to enlarge view. 

The Large-Cap/Small-Cap stock ratio continues to sit near all-time highs, showing that risk appetite among market participants remains weak.

Nifty Bank, the largest sector of the market, is making new relative lows despite waning downside momentum. It's unlikely that the market will move higher without its best player participating.

Copper has made a nice run at resistance and continues to consolidate below it. We need to see prices back above 410 to show that market participants are becoming more optimistic about global growth expectations and risk assets.

US Five-Year Yields continue to make new lows, albeit downside momentum is waning. Money is clearly flowing into Bonds, not Stocks.

Zero of the five “Bull Market Barometers” we’re monitoring are currently above their key levels. Not much has changed in the last two weeks. Until we start to see these longer-term indicators act better then there’s little reason to believe that we are in the midst of a new bull market.

Instead, it argues that we should be prepared for continued volatility in both directions and taking trades on the long and the short side when the reward/risk is skewed enough in our favor. Otherwise, cash and uncorrelated trades like Gold continue to work well.

Our Members-Only Conference Call is on Tuesday, May 19th at 7PM IST. We'll be discussing the strongest trends in Fixed Income, Commodities, Currencies, and Equities and how we're taking advantage of them.

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Allstarcharts Team

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