Hey Market Pilot,
Over the past several months, part of the talk about the market has been the poor market breadth (number of stocks participating in a move) despite the record high in the indexes. One theory I had floated across was that if the indexes stayed up, and breadth cycled down, what would happen if all those poorly performing stocks making up the poor breadth spent enough time trending down, that these tickers eventually became good deals and started to strengthen?
This is just an idea of mine on how poor breadth may be working beneath the surface if it doesn’t cause the indexes to roll over and die. One exchange traded fund (ETF) I have been watching for years is the IBD 50 (FFTY). I have been keeping an even sharper eye on it this year because it seemed to help with my timing of the Shares Russell 2000 ETF (IWM) monthly flag and the cycling of market breadth.
I noticed this week the FFTY tested and bounced off the daily 50 moving average, and the Moxie Indicator™ fired. This is a confirmation of support on that time frame and is what I look for in a stock. Given that FFTY is a basket of stocks, and that representation of stocks has been chopping sideways for months, this appears to be something constructive at last.
Your Profit Pilot, TG