Late night comments, 5/1/2010

(Click on the charts above to see a bigger version.)

The first chart above shows the number of stocks from the 50 Leaders making new 20-Day highs. This is now at an extreme level of 60% (30 stocks). At the previous high of the All Ordinaries (XAO), in mid-October, the percentage of stocks making new 20-Day Highs was 40% (20 stocks).

This is beginning to look like a blow-off top.

Then look at the next chart.

This now has the complete profile of an over-bought market. The percentage of stocks from the 50-Leaders above the respective 10-Day, 50-Day and 150-Day Moving Averages is as follows:

• Above the 10-Day Moving Average - 90%
• Above the 50-Day Moving Average - 90%
• Above the 150-Day Moving Average - 96%

These stocks can, of course, stay up there for extended periods of time. But when they start to fall - this market will probably fall hard - at least in the short term.

What's fascinating about these stats is, while the number of stocks in the 50-Leaders making new 20-Day Highs is at an extreme (new) high, the percentage of stocks above the 10-Day Moving Average has dropped back in the past two days from 98% to 90%. hmmmm. Somethings out of kilter here. This divergence may or may not mean something. But it certainly looks ominous.

Cheers
Red