Over the past week, all of my core market health indicator strengthened. Most notably, my measures of the economy and market quality, which had been laggards, rebounded sharply. Their current trajectory will likely see one or both of those categories go positive next week if the market continues to show underlying strength. It’s looking like the consolidation we’ve seen for the past two months is about to end.
Another indication that the consolidation is about to end comes from Trade Followers. Their measure of sentiment for the S&P 500 Index (SPX) is calculated from investor and traders live comments on the Twitter stream. When the trend of sentiment changes it often leads the market. Earlier this week this indicator broke a downtrend line that had been in place for almost three months.This indicates investors are getting comfortable with the market moving higher and should provide fuel for a run at new highs.
It looks like the market wants to make a run at new highs. The technical indicators that have been lagging and refusing to move higher have rebounded sharply this week and sentiment has changed trend from negative to positive. Here we go!