Retiring The Bull Market Checklist

From the desk of Steve Strazza @Sstrazza

In mid-April, we posted a list of 20 key chart levels we were monitoring in some of the most important assets around the world. We've used this as a risk-gauge to measure the internal strength or weakness of the market in the time since.

The list started at 60% bullish, never fell below 50%, and has been stuck at 90% with the same two bearish hold-outs for the past month now. The list has grown consistently more bullish since we began tracking it as more charts continued to break above our levels.

Since the end of May, 18 of the 20 items have been in bullish territory and many have run a good amount from our risk-levels. With the strongest stocks and indexes making new all-time highs and confirming this bullish outlook, prices have spoken and it's time we retire our bull market checklist.

In this post, we'll reveal the two stubbornly bearish charts on the list that never reclaimed our levels as we are still keeping an eye on them. Then we'll provide a quick rundown of some new things we are watching to gauge the strength of this rally going forward.

The last items to flip from bearish to bullish as well as the last two stuck in bearish territory all have a common theme... financials and yields. Broker-Dealers & Exchanges $IAI and Regional Banks $KRE both flipped bullish in late May and have remained above our levels of 58 and 35 since.

Despite the strength from these subsectors, the Financial Sector SPDR $XLF is still trapped beneath its 2011 lows relative to the S&P 500 $SPY. This is the first bearish item remaining.

Click chart to enlarge view.

It's certainly worth noting that price just successfully defended its March 2009 lows. Although, the level we really want to see this ratio reclaim is 0.082. There is clear overhead supply in this area as evidenced by the swift rejection when price recently retested it from below.

For now, this chart is rangebound between these former lows. Whichever direction it eventually resolves in could have major implications on markets.

The same can be said for the 5-Year US Yield, which still has a lot of work to do to get back above its 2012 lows near 0.54%.

This is the second and final bearish item on our list.

While it would be a positive for both of these charts to reclaim their former lows, if they don't and remain trapped in bearish territory, it's really not much cause for concern as this is more than outweighed by the overwhelming amount of bullish evidence we're currently seeing.

What is some of that bullish evidence?