Oct 20, 2010

October Breadth Indicators

This month review of the market breadth indicators is showing some interesting signs. The number of stocks closed above 50-day moving average reached the overbought area of +1SD. This extreme value is suggesting only one thing – expensive market. The tricky in this situation is the point that stocks could stay in this levels for considerable time. If we turn back to previous top in mid April stalling period in the indicator could last up to month. In the same time S&P500 could continue climbing.
 
sentiment-2010-10-20-1
 
VIX indicator also is supporting current suggestion. Despite that fear gauge (now 20.63) is at lowest level since May it is higher than April values (17). There is no doubt that current trend of the market is bullish and it is expected to continue, but investing now should be cautious considering indicators values.
 
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