Technical Indicator Suggests Market to Bounce Soon

By on June 8, 2011

Yesterday tradersnarrative blog  suggested the market is due for a short-term bounce based on a technical indicator they developed.  They compare the ratio of S&P 500 stocks trading above their 50 day moving average relative to those trading above their 200 day moving average.  Over the past two years the ratio has broken below 0.5 eight times.  Each time was followed by a bounce in the market. 

Of course, in a new bear market this relationship will break, catching unwary investors off-guard.  However, tradersnarrative doesn’t interpret the market to be collapsing anytime soon.

Source: tradersnarrative

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