May 13th, 2008

New High List:: EL andSTE

It’s so close yet still no cigar. The S&P 500 Index is still stuck in that “suckers’ rally zone”, the area between the 180-day moving average and the slower 90- and 60-day averages as describe earlier. The most significant change that’s taken place since I last wrote about this is that nearly each of the four moving averages have turned up.

What that means is in “diffusion index” terms, the level of the S&P 500 index today is above the level that it was over the average past 60, 90, 180 and 300 days. So as the oldest value in each of the averages is replaced by today’s value, the recalculated average is increased. That’s even true of the 300-day moving average indicating that the Index 300 days ago was lower than it is today.

I know that this is all gobbledegook (it’s a real word, look it up) but it’s only important to understand the likelihood of the Index being able to move out of the “suckers’ rally zone” and cross over the 180-day moving average triggering an “all in” signal from my Market Timing Indicator (MTI). Take a look at the chart:
Beneath the surface, one of the interesting events events is the growth of the new high list since this is one of the principal places that new stocks to buy are triggered (see my April 21 and April 28 postings) :

Unfortunately, the list is still “owned” by Oil & Gas stocks. But today, a number of new names made it to the list including the following interesting stocks(click on symbol for charts):

  • EL (Estee Lauder): Note next hurdle is breaking through 51, a resistance extending forward from all-time high in 2000
  • STE (Steris): Note interesting strong resistance trendline dating back to 2003 (which it recently broke free of) within an upward sloping channel

Although the MTI hasn’t yet sent its signal, I have started to put on positions in the stocks I’ve mentioned here. Hope my anticipation won’t be penalized.

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