• 314 days Will The ECB Continue To Hike Rates?
  • 315 days Forbes: Aramco Remains Largest Company In The Middle East
  • 316 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 716 days Could Crypto Overtake Traditional Investment?
  • 721 days Americans Still Quitting Jobs At Record Pace
  • 723 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 726 days Is The Dollar Too Strong?
  • 726 days Big Tech Disappoints Investors on Earnings Calls
  • 727 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 729 days China Is Quietly Trying To Distance Itself From Russia
  • 729 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 733 days Crypto Investors Won Big In 2021
  • 733 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 734 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 736 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 737 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 740 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 741 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 741 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 743 days Are NFTs About To Take Over Gaming?
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

  1. Home
  2. Markets
  3. Other

One Way To Know When You Are Early or Late in a Rally

What happens to Leadership stocks in a strong rally?

Common sense would tell you that the number of Leadership stocks would expand, and the Strength of the Leadership stocks should increase dramatically.

But, have you ever asked yourself, "What is the key determinant that allows Leadership stocks to do that?"

When you think of it, the answer is pretty simple ... money. The more money flows into the market, the more money is allocated to the Leadership stocks.

There is an old saying: "A rising tide lifts all boats". And essentially, that is what happens, but it happens when the Leadership stocks catches everyone's attention making them feel that they don't want to be left out of a good rally. So ... the stragglers get braver and jump in late, often too late.

There are a number of ways to quantify the "when" of what is early, and what is late.

One of the ways is to simply run a nightly count of the number of Very Strong Stocks on the S&P 500. So, when the count trends up to above zero and continues positive and higher, then a new rally is in occurring. This continues until it pulls back enough to break its rising trend line, or fall below a count of 45 and then on toward negative territory. Which is why we bring this up today ...

If you look at today's chart, you can see that there was a very large pull back in the number of Very Strong Stocks yesterday. Enough so, that the count dropped to the horizontal support line at 45. That is an ALERT condition where what happens next is very relevant to the rally, because if the count continues down into negative territory, then there won't be enough Leadership stocks on the rise to keep the rally going and the market will pull back.

NYA Index

 

Back to homepage

Leave a comment

Leave a comment