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Nearly Every Stock is Up. Where to Next?

By John Del Vecchio and Brad Lamensdorf

The market has been the little engine that could over the last year. After a nasty move down during the COVID hit, stocks have done nothing but gone up.

Nearly every stock.

Market breadth is now reaching extreme highs.

Take a look at this chart courtesy of SentimenTrader.com

Nearly Every Stock is Up. Where to Next?
Nearly Every Stock is Up. Where to Next?

As the chart illustrates, the percentage of stocks in the S&P 500 that are above the 200-day moving average hit 95.23%.

That’s a 15-year high.

From here, one might expect a bit of a cooling off. After all, everything is up. We are now in a situation that is 180 degrees from a year ago.

From here, it likely gets a bit more challenging to generate excess returns.

Can stock push higher from here?

Absolutely.

Highs may be tougher to predict because people can keep buying and buying. On the other hand, bottoms may be easier to see because once they have sold all they can, the market looks very washed out and the only place to go is higher.

But at 95%, a level not hit going back 15 years, things would have to be awfully different this time for the not to be a meaningful pullback in stocks sooner than later.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

 

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DISCLOSURE: LAMENSDORF MARKET TIMING REPORT Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA. This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s. Active Alts is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader Past performance is not indicative of future results.