All-Time High Stocks: Market update

Since my last market update (June-8-2010: Weak and Oversold) stocks and indices rallied. This improved the 20-day trends from downtrends to uptrends (see the first table below). Similarly, there has been relief from the extreme oversold conditions last time to a neutral reading this time (see Tables 2, 3, 4). There is a lot of information to sift through so I want to highlight a few key points that underpin my perspective that we are at a critical point. I think there is a strong possibility that what happens in the next week or so will determine the market's direction in the next 6-months.

It is not my goal to 'predict' the future, but simply to listen to the message of the market and react to it. If the market's primary trend (roughly translated as the slope of the 200 day EMA) switches to down then I am very cautious about initiating new long positions and I tighten stops on existing longs. But keep in mind that strong stocks, like stocks near their all-time highs, can continue higher for months after the index has switched from an uptrend to a flat market. See my previous post on POT in 2006-2008 for example, where POT continued higher for almost 9 months until the Canadian index finally put in a double top.

Four reasons why I think the US market (and most equities) are at a key decision point:

Many 200-day EMAs that are flat or nearly flat, if the market cannot turn these back to "UP" in short-order then I expect more downtrends showing up soon (it's just how the math works out).
Exactly 50% of stocks are above their 200-day simple moving average... a tipping point of sorts.
Although the 20-day SMA is upward sloping, there are nearly identical numbers of 20-day highs and 20-day lows. I interpret this as a bearish divergence.
The market is no longer oversold so bulls can't rely on that 'fuel tank' to propel the market higher.

Trend Direction by Broad Index 22-Jun-2010 vs. 08-Jun-2010
Index	Slope of 20-day SMA	Slope of 50-day SMA	Slope of 200-day SMA	Slope of 200-day EMA
QQQQ Nasdaq	UP (down)	DOWN (down)	UP (up)	UP (flat)
SPY S&P500	UP (down)	DOWN (down)	UP (up)	FLAT (down)
IWM Russell 2000	UP (down)	DOWN (down)	UP (up)	UP (down)
EWC Canada	UP (down)	DOWN (down)	UP (up)	UP (flat)
EFA MSCI EAFE	UP (down)	DOWN (down)	DOWN (down)	DOWN (down)
FXI China	UP (down)	DOWN (down)	UP (down)	UP (down)
GLD Gold	UP (up)	UP (up)	UP (up)	UP (up)
UUP US Dollar	DOWN (up)	UP (up)	UP (up)	UP (up)
Numbers in parentheses are from 10 trading-days ago SMA = Simple Moving Average, EMA = Exponential Moving Average

US Stocks Making New Highs and Lows 22-Jun-2010
Period	New Highs	New Lows	Hi vs Lo	Hi/Lo Ratio
20 day¹	280	289		1.0
50 day¹	77	237		0.3
52 week¹	52	71		0.7
All-Time²	27	22		1.2
¹ Out of 5092 US Stocks on FINVIZ ² From uglychart.com based on the previous close (includes funds)

US Stocks in Overbought and Oversold Conditions 22-Jun-2010
Level	Overbought	Oversold	Overbought vs Oversold	OB/OS Ratio
Mild RSI(14)=60 vs 40	287	1146		0.3
Moderate RSI(14)=70 vs 30	46	171		0.3
Extreme RSI(14)=80 vs 20	6	19		0.3
Ridiculous RSI(14)=90 vs 10	1	1		1.0
¹ Out of 5092 US Stocks on FINVIZ

US Stocks in Relation to their Moving Averages 22-Jun-2010

Worden's T2108 on 21-Jun-2010 = 49.47

Upgrades in the utilities sector... must be a new bull market!

Trend Direction by Sector 22-Jun-2010 vs. 08-Jun-2010
Index	Slope of 20-day SMA	Slope of 50-day SMA	Slope of 200-day SMA	Slope of 200-day EMA
XLY Consumer Discretionary	DOWN (down)	DOWN (down)	UP (up)	UP (up)
XLP Consumer Staples	DOWN (down)	DOWN (down)	UP (up)	FLAT (flat)
XLE Energy	UP (down)	DOWN (down)	UP (up)	DOWN (down)
XLF Financial Services	UP (down)	DOWN (down)	FLAT (down)	FLAT (down)
XLV Health Care	UP (down)	DOWN (down)	UP (down)	DOWN (down)
XLI Industrial	UP (down)	DOWN (down)	UP (up)	UP (down)
RWR US Real Estate	UP (down)	DOWN (down)	UP (up)	UP (up)
RWX Intl Real Estate	UP (down)	FLAT (down)	FLAT (down)	FLAT (down)
XLK Technology	UP (down)	DOWN (down)	UP (up)	FLAT (down)
IYZ Telecom	UP (down)	DOWN (down)	UP (up)	FLAT (flat)
XLU Utilities	UP (down)	FLAT (down)	UP (down)	FLAT (down)
Trend in parentheses is from 10 trading-days ago SMA = Simple Moving Average, EMA = Exponential Moving Average