With the dollar trading lower today along with stocks, we haven’t seen a move like this since 1928!
Another Week, Another Record
(King World News) – From Jason Goepfert at SentimenTrader: “Tremors of concern that have emerged among former bulls seem to stem from one primary worry – the market’s calm rise has been shattered, and that’s going to lead to months of re-adjustments by a broad swath of market participants…
Evidence of the change in character is everywhere and not hard to find. Bloomberg posted a good example, showing one of the most extreme changes ever in the market’s momentum. We knew heading into January that the Relative Strength Index (RSI) of the S&P, its constituents, and even global markets, was historically stretched. A high RSI can be a negative sign of overbought conditions, but an extremely high RSI is most often a sign of the kind of momentum that persists. If you click the links for any of those reports from the previous sentence, you’ll see that long-term returns, six months and longer, were rarely if ever negative.
As noted by Bloomberg, the RSI went from an overbought level to an oversold one in almost record time. The change in the S&P 500’s RSI over the past 10 days has, indeed, set a record. Since 1928, the RSI had never dropped by more than 50 points.
Once again, it was difficult to find a time that led to negative returns. Over the next three months, 18 out of 20 showed a positive return. There were a couple of failures longer-term, most notably 1972 when it triggered near a bull market peak. The S&P still gained over the next month, but failed after that. In 2010, stocks had a volatile ride and some shorter-term scares but still rallied in the medium- to long-term. We’d rate this as a longer-term positive.
The chart and commentary above are from SentimenTrader. To try a free 14-day trial of the internationally acclaimed work that Jason Goepfert produces at SentimenTrader simply CLICK HERE.
***KWN has now released the timely KWN audio interview with Dr. Stephen Leeb and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
ALSO JUST RELEASED: This Is Truly Amazing – One For The History Books CLICK HERE TO READ.
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