Over the last few months, we’ve presented a couple of simple quantitative studies meant to encapsulate the factors driving our Major Trend Index to the brink of bear territory. The chart and table might provide the best summary yet.
Market technicians continue to argue that a bull market peak is unlikely to form with the majority of U.S. stocks (and global ones, for that matter) still participating in the new highs of the blue chip indexes.
The Wall Street technical crowd remains mostly bullish, in large part because breadth accompanying this year’s new high has been decent. We follow the same figures and can’t dismiss their point. But pundits whose market views are heavily reliant upon the NYSE breadth figures should be aware of a strong upside bias that’s existed in the data since around 2001.
The renewed embrace of risk hasn’t extended to the sector level. After resisting decline in late September through mid-October, defensive sectors have matched the rebound in Cyclicals, almost point for point.
Whether one considers the post-2008 upswing two bull markets or one ultimately matters only to those who (like us) enjoy cataloging such things. But labeling the 2011-2013 rally a new bull market would certainly explain some of the “immature” behavior exhibited by U.S. stocks in recent months.
A “dozen” major market measures have moved to new bull market highs in the last three months. But many of these have been the groups that do best when “risk” is “off,” and may be a reason “Ain’t Nobody Happy,” even in an up year.