Our Market Angiogram

Market Health: Measuring Mr. Market’s Pulse

An angiogram is an X-ray that provides images that can help doctors detect blood vessel abnormalities, including weakened blood vessels, plaque deposits, and blood clots. Our Primary Trend Indicator is similar, getting inside the market and detecting what is going on beneath the surface.

One input into our “angiogram” is the measurement of the number of stocks that are trading above various moving averages. Are stocks participating, or are there clots in the market’s arteries?

Below we see the S&P500 Index in the top frame and the percent of stocks above the 20 Day Moving Average, and the percent of stocks above the longer 200 Day Moving Average in the bottom pane. You can see the difference between the major top in February and the top that started the fall correction after the market peaked at the end of August. In February, the weakness in the short term indicator spilled over into the longer 200 Day indicator. In August, the longer 200 Day readings held up and the correction ended and the market went higher.

At this stage, the longer indicator is still holding up and the patient should be able to avoid major health problems. Volatility remains high, Mr. market is way too optimistic and needs a rest, but odds continue to suggest he’ll avoid the hospital.

 

 

 

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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.