Last week, I mentioned that some of my core indicator categories are getting over bought and when that happens it often fuels several more weeks of upward movement. It looks like we’re starting the next wave up. My core indicators continue to show strength, but there is one concerning thing. My core measures of risk fell slightly this week. That isn’t normal when the market is making new highs. This is the indicator category I’m watching most closely at the moment to indicate the rally is coming to an end.
My core market health indicators continue to show strength. Most notably, are the core measures of risk which are getting into over bought territory. This is often a good sign that results in a melt up that lasts several weeks. The last time this happened was the first week of October which resulted in a nice run followed by a bit of consolidation that should fuel the next run higher.
My core market health indicators are bouncing around as the market consolidates in a sideways pattern. This is healthy behavior and should resolve with another leg upward.
Last week, I said that we’ve got everything we need for the next leg of this bull market. This week we’re getting confirmation of the rally with all of my core market health indicators jumping substantially. Some of them are starting to get into overbought territory, but when this happens it often fuels the rally for several weeks before it ends. Enjoy the ride.