Indicator turned bearish despite high in index

October 11th, 2009

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As you look at the trend analysis of the S&P 500, Dow Jones Index and Nasdaq, you will notice that all of them are still in strong up-trend. The US dollar index, on the other hand is in a strong down-trend. As Marc Faber wrote about his observations on investors in his latest market commentary,

… the longer a trend has been in place, the more confident investors become that the trend will last forever.

Indeed, there are many (including the so-called ‘cash on the sidelines’ crowd) who are more and more convinced that good times has returned. The fear of several months ago has given way to greed today.

But now, we will show you another graph:

NYSE Bullish Percent Index

NYSE Bullish Percent Index

In the midst of strong up-trends in stock indices all over the world, this Point-and-Figure (P&F) chart is giving a negative cue. To put it simply, this chart is telling us that the percentage of stocks in the NYSE that are still giving P&F buy signals has turned into a down-trend.

We shall see what transpire ahead.

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