THE BOTTOM LINE
Our supply and demand indicators reflect conditions favorable to the establishment of new all-time highs, late or soon.
The Wobble Higher
The last several of these updates have advised investors that the stock market was likely to continue to “wobble” higher in an environment of grossly overly bullish sentiment, and historic levels of overvaluation according to a number of metrics. Unprecedented global liquidity compliments of central banks continues to float the prices of desirable, and usually liquid assets higher, and well beyond the usual valuation benchmarks, which have signaled danger in the past.
Lowry Research measures of supply and demand continue to be mixed, but not yet tilted far enough into dangerous levels, which has correlated with major tops of the past. Our own measures supply and demand, which include modules for accounting for the influence of derivatives in the overall balance of supply and demand, also show some negative divergences, but have not likely reached levels representing imminent danger in the absence of a “Big Chill” warning having been issued. So, yes there are warnings out there, especially coming from blunt instruments, that the stock market is growing less healthy, but not enough at this point, which would seem to tilt the balance of supply and demand in favor of the completion of a major top.
TATY — A REPRESENTATIVE OF A FAMILY OF STRATEGIC SUPPLY AND DEMAND INDICATORS
TATY is shown in Snapshot-291 in yellow with the S&P-500 overlaid in red and blue candle chart format. TATY finished the week down slightly at 144.
TATY failed to develop a “Big Chill” warning during the recent weakness in the price of the S&P-500, and until it declines below the red zone surrounding the 140 level TATY will continue to grade out as favorable toward more rally. Should TATY develop enough strength to begin to oscillate forming bottoms near the red zone, and tops near the blue zone surrounding the 160 level, then that would be a very favorable development for the continuation of the bull trend.
SAMMY — A REPRESENTATIVE OF A FAMILY OF TACTICAL SUPPLY AND DEMAND INDICATORS
SAMMY is shown above in yellow in Screenshot-307 with the S&P-500 overlaid in red and blue candle chart format.
The previous negative divergences on the SAMMY chart, denoted by the dashed down sloping orange and magenta lines, remain from previous updates. The major change this week is the increase in strength in SAMMY sufficient to levitate it above the negative diverging orange dashed line. And, the upsloping dashed green line denoting the rising strength, and rising bottoms in the SAMMY indicator, which suggested last week that the price may have some odds of actually accelerating higher. The bears may turn out to be right, but if I were short the stock market those rising bottoms in SAMMY would be a big concern.
Please stay safe!
