Market breadth has turned up from extreme oversold readings, suggesting continued upside ahead

Last week I already showed that market breadth, as measured by the NYSI, was reaching historic lows in this current bull market off the 2009 lows. See here. And showed clearly that such lows coincide with important bottoms. That call has hitherto been correct as the market bottomed that very same day and rallied since 80p and is now only 10p shy of its ATH (on the S&P500). Not too shabby a feat if we may say so ourselves. Of course Intelligent Investing continues to track market breadth daily for any further clues, as it tells us what’s happening under the hood: a very important insight, as my past from last week already showed.

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The chart below shows NYMO, which the NYSI is comprised off, and the observable fact is that NYMO has gone from about 2 months of negative readings (with a few brief respites) to increasing positive readings. For the 1st time since April this year NYMO has remained positive for 5 days in a row, and for the first time this entire year (!) reached above 40. Those are two noteworthy facts and tell us things are changing internally.


As such, NYSI has been increasing since the July 8 call (you bought we went long then!) and in fact has increased so much that it gave a buy-signal crossover with its own 34d EM yesterday. It came off extremely oversold readings over the past 2+ months, also telling us things are changing importantly.


Last but not least, also the summation index of the S&P500 (called SPX-SI) produced a buy signal (even a day earlier than the NYSI), adding weight to the evidence of a new bullish run having started. None of the facts we can observe lead us to suggest that price will go down. On the contrary the observable evidence suggests further upside. As such, price targets for the S&P500 have been provided to our members today.


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