The cycles in oscillators we follow have bottomed, signaling a return to bullish trends. In addition, financial reports are supportive, with S&P500 company profits up nearly 20% compared to the same period in 2016. Sales, the life blood of any company are 6% higher, while profit margins are at new highs.
“This is in stark contrast to early 2016, when profits had declined by 15% and most investors expected a recession and a new bear market to be underway.” – The Fat Pitch aka @ukarlewitz
Cycles and Bullish Trends
The cycle in the number of new highs versus new lows is clearly changing to bullish. Whenever this happens, the following 5-25 days are typically higher by +2% on average. The same goes for NYMO, which hit an extreme (-82.16) two weeks ago.
Cycles and Bullish Trends Return – Hi-Lo Percent
The number of 52-week highs is cycling upward as well. Watching extremes in this indicator rewards the observant investor when extremes are met. Last week Hi-Lo turned abruptly from an extreme low. The following 5-20 days are typically higher anywhere from 2-3% on average.
Price action is bouncing off VBP support and the ascending trend line. RSI and Stochastic suggest relative strength is in the bulls control for now. A bullish trend will likely develop over the next couple of weeks.
Watch List for the Week of 08-28-2017
Most of the winning stock picks in the weekly watch list should do well. Futures are trading higher leading to the opening bell.
In addition, those stocks we mentioned last week related to building, construction and home improvement should follow through today. Watch HD LOW USG GNRC among others in this industry group, as damage from the hurricane was greater than anticipated. Home owners will need to replace damaged items as well. Watch AMZN, WMT, TGT and other major retailers.
If you missed the weekend video newsletter, you can find it here: