As the market rallied this past week, my core market health indicators bounced around a bit. Most notably, my measures of trend surged to nearly over bought conditions. Core measures of risk continue to lag the market and look like they’ll need another week or two of sideways or upward movement (probably some backing and filling near new highs) in the S&P 500 Index (SPX) to go positive.
One sign that the market is recovering from a breadth perspective comes from the Bullish Percent Index (BPSPX). The damage done to point and figure charts is being repaired and has brought BPSPX back above 60%. That takes a lot of pressure off from a risk perspective.
Market internals are repairing themselves in anticipation of a rally to new highs, however, we may need a bit of backing a filling before moving higher.