Market did manage to maintain its uptrend so far. Earnings season was the catalyst as well as Euro-zone worries were discounted. Now that market is in extended territory, a pullback is due. However, market can remain in extended territory for weeks before a meaningful pullback happens. So then how do we know when to get out!!!
Lets take a look at historic BPNYA Index above 70. As can be seen from below chart, once BPNYA is above 70 we have a high probability of pullback or correction. Remember, stock market is a game of probability and all we need to do is have winning odds on our side. Once BPNYA crosses EMA(30) that triggers SELL signal....
Below chart is for informational purpose. Just like BPNYA which is considered as a Breadth Indicator, NAHL is also considered as a Breadth Indicator. The chart below speaks for itself, hence it would be appropriate to conclude that market may have moved into a BULL market for now. We will certainly get a pullback or correction which would provide us with a good BUY-ing opportunity. This BULL phase may continue for several months ahead unless we see Euro-zone fears creep up again.
Below is the current BPNYA chart, as can be seen that BPNYA is well above 70 mark. Wait for it to cross EMA(30) which will be our SELL trigger. Have patience.....
Stay alert and have a plan...
What is NYUD?
What is BPNYA?