Sunday, April 04, 2010

A Few Caution Signals for the Bull Market in Stocks

After hitting fresh bull market highs late this past week, we saw continued bullish sentiment in the CBOE put/call ratio (top chart), with readings more characteristic of those that have occurred at recent market tops than bottoms.

Upside momentum has continued to wane as the market has plowed higher (bottom chart), but is nowhere near oversold levels.

Meanwhile, the rally has continued to become more selective. Across the NYSE, NASDAQ, and ASE, we saw 3059 20-day highs on March 5th, 2706 on March 17th, 1554 on March 23rd, and 1362 this past Thursday. Thursday also saw 501 new 20-day lows, a level elevated from those seen in early March.

All of these are yellow caution lights for the bull that I will be following closely going into the new market week. Tomorrow morning I will post the weekly indicator review and, of course, each morning before the market open I'll post an update of indicators via Twitter.