NYSE Bullish trend breadth turns positive

  • 18 February 2012 |
  • Written by  Skot Kortje, Stock Trends Analyst
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The Stock Trends NYSE Bull/Bear Ratio has turned bullish. Growing investor confidence is apt to push U.S. equities even higher in 2012.

 

Notes of bullishness are ringing louder for U.S. equities. A market rally generally adds to investor confidence, and the already generous 8 percent move in the S&P 500 index since the beginning of the year has market prognosticators looking for more. Adding to this awakening is the uptick in our Stock Trends NYSE Bull/Bear Ratio which is now reading positive for the first time since a bearish grip took hold of the market again in the summer of last year.

 

 

Since the beginning of the year the number of strong Bullish () stocks has increased from 25 per cent of trending NYSE stocks to the current 44 per cent. Strong Bearish () NYSE stocks have dropped from 51 per cent to 13 per cent. The Bull/Bear Ratio includes both strong and Weak Bullish/Bearish stocks – the ratio of NYSE stocks in a Bullish category (, or ) to NYSE stocks in a Bearish category (, or ) has risen to 1.03 from 0.43 at the end of 2011. This signals a new period of bullish breadth for the Big Board.
 
For more conservative market-timing investors this Bullish turn in the distribution of Stock Trends indicators delivers a fresh opportunity to increase their exposure to U.S. equities. Past bullish readings of the Stock Trends Bull/Bear Ratio are fairly supportive of confidence in this signal.
 
The last two periods of a positive (above 1.00) Stock Trends Bull/Bear Ratio on the NYSE have correlated with the following returns when measuring the S&P 500 index from the date of the positive signal for the ratio to the date of the return of the Stock Trends Bull/Bear Ratio below 1.00, signalling a Bearish trend distribution.
 
Bullish trend distribution period S&P 500 index %chg
February 1, 2002 – August 17, 2007 29%
June 12, 2009 – August 12, 2011 25%
 

The current bullish reading of the Stock Trends Bull/Bear Ratio confirms that the market foundation is in place for more gains this year.
 
 
 
 
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