2013 High - Low Stats Signal Bubble Trouble Ahead!
Another useful tool for analyzing an index which only includes your kind of equities is a comparison between the number of issues establishing new 52-week high ground and the number sinking to new 52-week lows. The longer the numbers are overwhelmingly positive, the more likely it is that a correction is approaching.
Superficial analysis is very straight forward --- there should be more new highs in an upward trending market and more new lows during a correction.
- Over the past 49 months (April '09 thru April '13), months with more new highs (45) have exceeded months with more new lows (4) by a huge margin (see chart) --- including the past nineteen months in a row; 30 of the past 32.
- The March numbers were the strongest since the rally began in March 2009.
Has your portfolio reflected this tremendous upsurge in the IGVSI market?
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The New High and New Low issue stats can identify weaker and/or stronger sectors within the Investment Grade Value Stock selection universe --- very important in helping investors determine where the bargains are and where the profit taking opportunities should be.
New High vs. New Low numbers are at pre-Financial Crisis, "Bubble" levels --- markets this strong just don't go upward forever --- why haven't you taken your profits?
Remember to be quick on your profit-taking feet, using the two 7's beats one 10 "Brainwashing Book" strategy. The correction you anticipate will get here eventually --- there has never, not ever, been a permanent upward only stock (or bond) market.
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(c) 2013 by Steve Selengut
