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Mark Hulbert
Jan. 20, 2010, 12:01 a.m. EST · Recommend (5) · Post:
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Dear politicians: We are fed up
By Mark Hulbert, MarketWatch
ANNANDALE, Va. (MarketWatch) -- On Tuesday, when the stock market hit a new 52-week high, no fewer than 316 NYSE-listed issues also hit new yearly highs.
For all of last week, furthermore, more than 800 big board issues hit new 52-week highs.
These are impressive numbers, suggesting to at least some analysts that the final top of the current bull market is, at a minimum, several weeks or months into the future.
Consider first an analysis of the last 13 bull-market tops recently conducted by Ned Davis Research, the quantitative research firm. On average, the firm found, just 13.2% of NYSE-listed issues were hitting new weekly 52-week highs at those bull market peaks.
At the Oct. 2007 market top, for example, the percentage stood at 14.4%. At the bull market top in early 2000, furthermore, the comparable percentage stood at just 6.4%.
What about the current situation?
Last week, according to the firm, 25.1% of NYSE listed issues hit new 52-week highs. That's higher than the comparable percentages at any of the last 13 bull-market peaks, suggesting to Ned Davis that "the tape is bullish."
This historical comparison is just one data point, of course, but there is more good news imbedded in the new-high data: There typically is a long lag time between when the percentage of stocks hitting new weekly highs reaches its peak and when the bull market finally tops out.
In fact, according to Davis' calculations, the average lag at the last 13 bull-market tops was 33.6 weeks -- nearly eight months. And on none of those occasions did the bull market top out before the percentage of weekly new highs.
This adds up to good news, because the peak so far in the weekly percentage of stocks hitting new 52-week highs came the week before last. That's when the percentage rose to 26.7%. Even if that 26.7% marks the highest level to which this percentage rises during this bull market, these historical parallels would suggest that -- if the future is like the past -- the stock market itself might not peak until the end of this coming summer.
Gerald and Marvin Appel, editors of the Systems & Forecasts advisory service, also pay close attention to the new high data -- thought with a slightly different twist. They calculate the daily ratio of the number of new 52-week highs to the total number of stocks that reached either new yearly highs or lows. They then calculate a 10-day moving average of these daily ratios.
As of the end of last week, this so-called "NYSE new high/new low indicator" stood at over 99%, which the Appels rate as "strongly positive."
What would it take for this indicator to turn bearish? In an email Tuesday afternoon, Marvin Appel wrote that the indicator would turn "intermediate term" bearish when it drops to below 80%.
The bottom line? No matter how you slice it, the new high data suggests that this stock market rally, at least from a technical point of view, is healthy.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
- Ken-Dee | 1:42 a.m. Today1:42 a.m. Jan. 20, 2010
The people of this country have had it up to here with the way our leaders are running our country, declares Rex Nutting.
9:41 p.m. Jan. 19, 2010 | Comments: 208
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