Stock Market Status

Momentum growth stocks are starting to participate in this rally. There is a chance we may get a signal from that index next week. This week SPY (ETF for S&P500) was down -0.1% compared to last week, however the Momentum growth stock index was up +1.4% compared to last week. The outperformance this week of the Momentum growth stock index compared to SPY indicates we should be ready to invest in this category of stock as soon as we get the signal.

The Market Breath ratio is showing overbought/extended signals, meaning that the market has gone up for some time and it may take a pause. As a rule when this signal appears, it is not a time to add new long positions. If one is able to find an outstanding stock, an exception to this rule can be made. Long positions are trades where one buys a stock expecting it to go up in price.

We should wait to get a signal from the Momentum growth stock index and let the general market base or go through a little correction. While we are waiting for these events to occur we should prepare a list of growth stocks we want to buy and be ready to invest as soon as we get a signal from these above mentioned events.

Chronology of uptrend signals:

Market Breath ratio gave an uptrend signal on 11/30/2011.
S&P500 gave an uptrend signal on 12/9/2011.
General Market Index gave an uptrend signal on 1/6/2012.