Risk environment is still cautious as downtrends linger.
Macro situation is a concern but has not been causing stress.
Breadth thrusts are firing, participation is expanding and for the first time this year new high lists are longer than new low lists. From the perspective of market internals, the rally over the past two months could hardly have been stronger.
This strength is showing up in our bull market re-birth checklist. July brought upside volume thrusts and the first breadth thrust (based on the percentage of stocks making new 20-day highs) in over two years. Last week brought to an end the string of 37 consecutive weeks of more new lows than new highs on the NYSE+NASDAQ. The trend in our net new high advance/decline line also turned higher.
Our bull market re-birth checklist has now had 4 out of 5 the criteria met. While this does not preclude periods of consolidation and testing, it does strengthen the case that a durable low has been made.
