Saturday, August 23, 2014

A Fresh Look at the Balance Between Strong and Weak Stocks

Here's an update of the Bollinger Balance measure described in the August 8th post.  This takes a look at every NYSE stock and calculates the number closing above their upper Bollinger Bands minus the number closing below their lower bands.  (Credit to the Stock Charts site for the data).  You can see how the measure topped out in early June and steadily weakened going into the price highs of late July.

Note also how the measure hit a low point just ahead of the price bottom early in August.  Since that time, we've had a rally to new highs in SPY, but the balance measure is well below its June peaks and has started to roll over.  This fits with the new high/new low data recently posted, showing that the current rally has been somewhat selective in its ability to generate fresh price highs across the broad range of shares.