This column was originally published on
on Aug. 4 at 8:53 a.m. EDT. It's being republished as a bonus for
I have received countless emails this past week begging me to be bullish:
"What would it take to turn you bullish?"
"What if the
were to break out through 1280, wouldn't
make you bullish?"
"Isn't it bullish that the American Association of Individual Investors numbers are so bearish?"
And so on.
But remember, I called for a rally, and now we've gotten one.
I looked for a low the week of July 17 that would lead to a rally into early August.
I harped on that theme in early July.
I haven't changed my view.
July 25, I wrote that there was no death cross in the S&P, even as folks kept trying to get me to look at the moving averages using exponential data so that I'd see one.
Perhaps it's because now we're solidly in week two or three of a rally that all of a sudden people want me to say the rally can last even longer.
I suppose if you arrive at the party late, you want the host to leave the bar open longer.
So today, by popular demand, I'll paint the bullish picture.
The advance/decline line has been very good these past few weeks.
It has been so good that it is now doing better than the S&P.
Because I'm not supposed to discuss the bear case, I will not point out that if we use cumulative volume, we are still well below the July 3 high.
The better advance/decline has helped the McClellan Summation Index rise. No complaints there.
The 10-day moving average of the new highs and new lows is also rising.
Then there's the oscillator, which I've been saying would not be overbought until next week. That's early August, isn't it? I can't change that timing. This is a mathematical calculation that has a time factor involved. What I can tell you is that if this market is truly strong, we will get overbought and stay overbought. (For more explanation of these indicators, check out The Chartist's
On the sentiment side, I did post in Columnist Conversation
Thursday that the American Association of Individual Investors sentiment reading was showing a very high percentage of bears, which is a contrary indicator and therefore bullish.
That's the bull case as I see it. But I may as well add something anecdotal: Since I tend to be way too early on my calls anyway (especially at highs), perhaps I'm just fretting about a high in early August and I should be fretting about a high in late August or September. After all, the four-year-cycle folks are all looking for a low in October.
Helene Meisler writes a daily technical analysis column. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback;
to send her an email.