The Investment Grade Value Stock Rally Hits Month 32!
Another useful tool for analyzing an index that only includes your kind of equities is a comparison between the number of issues establishing new 52-week high ground and the number sinking to new 52-week lows. Superficial analysis is very straight forward --- there should be more new highs in an upward trending market and more new lows during a correction.
- Since April 2009, days with more new highs (544) have exceeded days with more new lows (97) by a huge margin (see chart)--- only 5 negative months in the entire stretch.
- This came to an abrupt (but temporary) halt in August/September --- the most negative months in a year and the worst since the financial crisis correction bottomed out. Somehow, the bleeding had pretty much stopped by the end of theyear.
- For the period, IGVSI stocks established new 52-week highs 5.3 times as often as new lows.
The New High and New Low issues themselves can also identify weaker and/or stronger sectors within the Investment Grade Value Stock selection universe --- very important in helping investors determine where the bargains are and where the profit taking opportunities should be.
The 4th Quarter may or may not have been a transition into a refreshed rally, but with plentiful "smart cash", an inventory full of Investment Grade Value Stocks, and plenty of prospects on the daily shopping list, all I can say is "What, me worry!"
Remember, while this incredible volatility continues --- be quick on your profit-taking feet, using the two 7's beats one 10 "Brainwashing Book" strategy.
What does all this mean? See the Investment Grade Value Stock Expectation Analyzer.
