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John Gray - We Are Getting Very Close to a Top
With investors as well as professionals wondering when the global markets will peak, today King World News interviewed 32 year veteran, John Gray, from Investors Intelligence. When asked what he is seeing in terms of sentiment readings and where he believes markets are headed, Gray responded, “We had further gains last week with solid market action. This took the Nasdaq to new highs and this week we had the Dow Jones Industrial Average break above its highs from 2011. This week we also had the number of bulls move up to their highest level in quite a while, advancing to 52.1%.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
February 9, 2012
John Gray continues:
“So we now have the bulls above their January levels and their best reading since April of last year when the market peaked. At that time the bulls were 57%, so only about 5% higher than where they are right now. The trading also has the S&P 500 at highs along with the NYSE Composite. The larger cap indexes are still lagging behind now, only challenging their prior highs with the trading this week.
We had fewer bears this week with the number dropping to 28.7%, back to the level we saw two weeks ago. This area is the lowest in quite some time. We still want to see fewer bears to signal a market top, along with a higher level for bulls. Market gains will probably get us there over the next couple of weeks.
One of the interesting things has been the stubbornness of the bears, holding around that 30% level for the past three months, even with indexes hitting new highs....
Continue reading the KWN John Gray interview below...
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“What’s happened with the latest gains is those bears are saying the markets are due for a pullback.
Well if the indexes do break further to the upside, as appears likely from the other indicators we follow, that will finally draw in those reluctant bears and that money will fuel the market higher again and mark a peak.
Again, we were considering a week ago when we were talking, 3% or 4% above the April/May 2011 highs for the NYSE indexes, above July for the Nasdaq indexes should be enough to do it. The Nasdaq indexes are starting to show that action, so in terms of time it (a top) is coming fairly soon.
We use other momentum indicators and they are also extremely overbought. That would be comparing stock prices to their 50 and 150 day moving averages and we have those up at lofty levels which are rarely seen. Generally we see those at market tops.
Once we start to see some deterioration in that and that will happen before we see the sentiment peak, that will give further proof we are at a market peak. You almost see a giddiness and panic buying. People rush in and that’s those late-comers who capitulate and surrender their negativity.
They feel like they don’t want to lose out on the opportunity and you get that spasm of buying that marks the top. One of the clear sings of that will be buying climaxes. We had nearly nine hundred of those last April, stocks making buying climaxes. That will also be a clear sign of a market top on a weekly basis.”
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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
