Ride a Painted Pony, Let the Spinning Wheel Glide

Another remarkable sight: Every sector on a Bull Alert! Things keep getting crazier.

Let’s look at the NYSE BPI, which is currently in a column of X’s.


I’ve identified the support levels in green and the resistance levels in red. We’ve recently arrived at the most recent support level at 26%. There's definite resistance at 42% but the Bearish Resistance Line would be hit well before that, at about 39 or 40%. (There was resistance in 1999 that turned into support at 40-42% in 2000-2002 and then again became resistance. Prior resistance at 50-52% turned into support in 2004-2005.) Will we continue the upward trend or flip and test the previous support at 24%? I'm not sure, but there might be a clue in the Percentage-of-Stocks-above-their-Ten-Week-Moving-Average BPI.



You can see that it too is in a column of X's. The 10-week moving average is a short-term leading indicator and as such tends to foreshadow what happens in the 30% BPI (currently in O's) and the Bull Trends BPI. It would be unwise, however, to put too much faith in the 10% BPI.

So where do we turn?

Here's the S&P 500 chart:



As we can see, it mirrors the NYSE BPI in many ways (and its 10% and 30% charts are also similar, even though it's made up of 1/6 as many stocks as the NYSE). In fact, most of the indices are looking a lot alike right now, with slight exceptions (the 30% BPI of the Wilshire 5000, for example, is, in contrast to the others, in a column of X's).

The last column of X's in the S&P 500 BPI surpassed both recent and long-term support levels and stopped at a level of slight resistance from February of this year. The next resistance level is at 48-50%, where prior support turned to resistance in April and August 2008. But again the Bearish Resistance Line would be reached before that. As there are too many support levels that the index could conceivably fall back to (14%, 18%,26%, 30%) -- or it could dip below 10% again -- we have to be ready for anything.

So there's no magic eight ball to tell us what's going to happen next, much less what we are supposed to do.

But we already knew that, right?

Now is the time to be compiling our Watch List. The election may or may not have a large or immediate impact on the markets. Regardless, when the market makes a clear move to either form a bottom or continue the trend downward, it will be more than likely the opportunity of a lifetime.