This rally started after breadth went to extreme level 20 days ago. Extreme negative breadth often leads to explosive rally and this rally has proved to be like that. Breadth has steadily improved during the rally and there has been series of breadth thrusts.
The rally has been fueled by beaten down stocks. If you look at the top 30 stocks by price % change in last 18 days you will see most of those stocks started their rally from 52 week low.
VIT (Vanceinfo Technologies Inc.) is typical of the kind of moves in this rally. Stock was in decline for months and then in last 18 days is up 213%.
Before that stock was in multi month decline ...
The bottom bounces have been really strong and as a result of these bottom rallies 522 stocks are up 25% plus in a month.
What next. Some of these rallies will fade. Some will go sideways or pullback and set themselves up for further upside. Watch the top 300 stocks that have gone up the most in last 18 days. They will offer further upside potential in coming weeks or days.
If the rally continues then at some stage stocks near 52 week high also need to start participating in it. So keep an eye on top 100 stocks by Trend Intensity. Bottom fueled rallies can only last for few weeks ultimately money will rotate in to high relative strength stocks. Some high relative strength stocks near 52 week high were breaking out yesterday and they might take on the leadership.
1 comment:
My market breath indicator triggered a long like the long in sep 2010. That proved to make new highs in months after. So we should see new highs in a few months.
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