September 1st, 2009

What are Market Momentum Indicators Saying Now?

Couldn’t believe the scaremongering taking place on CNBC this afternoon. “Is this the correction so many have all been waiting for?” “Have US markets caught the Asian Contagion?” “How is the Shanghai market crash going to impact US stocks?” On and on it went in countless iterations.

As the market was bottoming, we continually the market’s internal health through our own momentum measures, like: percentage of stocks above various moving averages, the number of stocks with “Golden Crosses” and the number with “Bull Crosses“. Most recently, as the market began transitioning from the Accumulation Stage to the Mark-up Stage of its life cycle we began to also monitor the number of stocks making (1-, 2-, 3-, 4- and 5-year) new highs.

It’s time to revisit those statistics:

There’s been some minor deterioration as reflected in fewer stocks trading at new highs but that statistic is in an early stage, anyway. Most recently, though, fewer stocks are above their 100-day moving than a month ago. All the other momentum statistic, however, continue to improve. There is a realistic limit to how high the stat can go, I just don’t know what it might be since I hadn’t tracked the statistic before.

Over 5% of all stocks today can be identified clearly to be in bull mode with all moving averages headed higher and all of the MAs properly arrayed from fastest to slowest with the price above them all (i.e., those Bull Crosses). To access a spreadsheet of those stocks, click here. Of the 261 stocks in the list, 30 are in the IBD 100 list; looked at it another way, 30% of the IBD 100 stocks have Bull Cross MA alignments.

Many stocks in the list already have had huge runs, some are extremely inactive and some are very low priced – these are unsuitable to be recommended. But there are several with excellent reversal chart patterns and others that have only recently broken out of bottom patterns:

  • RDN (Radian Corp)
  • MGI (Moneygram International)
  • PLX (Protalix Biotherapeutic)
  • MED (Medifast)
  • SPPI (Spectrum Pharm)
  • SYNM (Syntroleum)
  • JVA (Coffe Holding)
  • PIP (Pharmathene)
  • ARUN (Aruba Networks)
  • FGXI (FGX International Holdings)
  • MELA (Electro-Optical Sciences)
  • LCI (Lannett)
  • NKTR (Nektar Therapeutics)
  • LL (Lumber Liquidators)
  • RGR (Sturm Ruger & Co.)
  • TPX (Tempur-Pedic)
  • NVEC (NVE Corp)
  • BGG (Briggs & Stratton)
  • APAC (Apac Customer Service)
  • INT (World Fuel Service)
  • BECN (Beacon Roofing Supply)
  • NCMI (National Cinemedia)

To reiterate, this list is assemble purely from a technical perspective. I’ve made no effort to evaluate the companies from a financial performance perspective. Some may follow through with outstanding moves, some will just be average and, based on past precedent, some will under perform or perhaps may not even survive another year. Finally, half the performance result depends on the stock market’s move.

But look at at a 9-12 month daily chart for these stocks on your favorite chart service. I recommend you try FreeStockCharts.com, the online version of Worden Bros. Telechart software package. If you opening a free account, you can create a watchlist of these stocks that will be maintained on their system and available for you to check anytime. With the service you can see charts down to minute-by-minute bars and the service updates real-time on a 20-minute delay.

[In full disclosure, I own, have owned or will soon own several of the stocks in the spreadsheet and highlighted in this post.]

Good luck and happy hunting.

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  • Minnesotalee

    The best and worst show on CNBC is FAST MONEY. The show lost steam when Radigan was let go. It lost even further steam when Melissa Lee took over. Notwithstanding her Harvard degree she is totally useless. She provides nothing to the show and is on the wrong side of almost every discussion. She just doesn't get it. But when she went to the shore for a week Rick Sentelli moderated the show and was a breath of fresh air. He should replace Lee. In fact anyone should replace her!!! Now Cramer forget it. Tonight it was one his boring, boring, taped show from an earlier time. He is so irrelevant. CNBC keeps up with the negative spin and the desire to get this market to go down. Maybe, just maybe, CNBC's pundits have been on the sideline all this time.

  • Anonymous

    check ted spread..pick up some edc some today…money should rotate to commodities & eem…

  • Anonymous

    Watching JNK (credit market), I will not sell my stocks unless JNK fall under 50MA..