Five Bull Market Barometers Update (05-22-2020)

JC Parets
May 23, 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. Institutions that drive major market trends are still hiding out in the biggest companies, not venturing out into the "riskier" Small and Mid-Cap stocks.

Nifty Bank, the largest sector of the market, collapsed to new relative lows again this week. The broader market cannot move higher without its best player participating.

We need to see Copper above 410 to show that market participants are becoming more optimistic about global growth expectations and risk assets. We closed right near our level, so next week is important.

"Safe haven" US Treasury Bonds, which serve as a benchmark for Interest Rates around the world, closed marginally higher this week. The long-term trend suggests that money continues to flow 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 month. 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.

Cash and patience continue to work well but if you need to own stocks and are interested in learning about how we're using "Relative Strength" to identify select opportunities in the stock market, read our full post here.

Premium Members can review Tuesday's Conference Call Recording and our Trade Ideas Page for a more comprehensive explanation of our market views and open trade ideas.

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Allstarcharts Team

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