All-Time High Stocks: Market update and guppy charts

The US market has found a more neutral position compared to my last market update on May 20th. On my last post there were nearly 2000 new 20-day lows against a meager 25 highs -- today the ratio is 1-to-1 and the number of new highs or lows on all time frames is small. To me, this means that the market is taking a breather, if you will, while waiting to find out who has more conviction: the bulls or the bears. The second and third tables below show that there are still more oversold stocks than overbought stocks, and lots of stocks are below their 20-day moving average, which could propel the bounce higher (i.e., bring the needle at least to the middle of the gauge). If that happens, the thing I will watch for is whether any of the major indices can start making a series of higher-highs. The % of stocks above their 200-day averages reads 56% or neutral, which supports the idea that the market could be at a turning point (from primary uptrend to primary downtrend). I don't suggest trying to predict what happens next, but rather to have a plan for how you will manage your portfolio in each of the possible outcomes.

US Stocks Making New Highs and Lows 28-May-2010
Period	New Highs	New Lows	Hi vs Lo	Hi/Lo Ratio
20 day¹	84	84		1.0
50 day¹	46	67		0.7
52 week¹	34	20		1.7
All-Time²	28	12		2.3
¹ Out of 5018 US Stocks on FINVIZ ² From uglychart.com based on the previous close (includes funds)

US Stocks in Overbought and Oversold Conditions (RSI 14) 28-May-2010
Level	Overbought	Oversold	Overbought vs Oversold	OB/OS Ratio
Mild RSI 60 vs 40	229	1193		0.2
Moderate RSI 70 vs 30	41	142		0.3
Extreme RSI 80 vs 20	9	21		0.4
Ridiculous RSI 90 vs 10	2	4		0.5
¹ Out of 5018 US Stocks on FINVIZ

US Stocks in Relation to their Moving Averages 28-May-2010

Finally, two guppy multiple moving average charts show that the path of least resistance for stocks appears to be down (as indicated by IWM, the small-cap index that had been leading the way higher), and defensive positions like gold (GLD) are in an uptrend. I will be watching the IWM chart to see if traders start shorting any rally that takes IWM near its long-term averages (i.e. what happens when the red lines move up and test the black lines). In November 2009 and February 2010 it was able to regain the uptrend, but this downturn looks more serious.

I've highlighted AZO and SXC (SXCI) as a couple stocks performing well of late, but there are times when it is better to wait and see what happens instead of feeling compelled speculate.

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