The blue chip market indexes have marched steadily higher over the past three months, despite the annual admonitions from “Sell in May” advocates. On an equally positive note, economic data has also strengthened since early this year, and our technical indicators remain bullish. Let’s look at where these technical gauges currently stand and how this scenario has historically played out over the next 12 months.
*Our Negative Leadership Composite (NLC) is showing an increasing bullish “Selling Vacuum” which has risen quickly, indicating that defensive selling pressure is drying up.
* This bullish “Selling Vacuum” in our NLC is near the critical +20 threshold, which, if it breaks through, has strong positive implications for the months ahead.
* Breadth and our InvesTech Bellwether Index have broken out to new highs, confirming that the bull market is still intact.
James Stack, InvesTech Research, www.investech.com, 800-955-8500, July 11, 2014
