The Dow has been rallying steadily since March of 2009, and in doing so, it has been lifting the spirits of both investors and consumers. But there's one item that bothers me, and I've written about this before. You can study it on the daily chart below. Slowly, subtly, the percentage of NYSE stocks that are holding above their 50-day moving averages has been slipping. The blue horizontal line is drawn at the 50% level.
The percentage of NYSE stocks that are holding above their 50-day MAs is now flirting with the critical 50% level. At Friday's close the percentage was 49.93%. Thus, the majority of NYSE stocks are trading below their 50-day moving average. Aside from the 30 stocks that make up the Dow, we're talking here about the whole market, the entire NYSE market.
This internal deterioration cannot continue without bearish consequences. And that's another thing I was thinking about over the weekend. We're now at a truly fascinating juncture in the market and in the economy. Study the chart above carefully.
Barron's this week includes two articles on the gold mining stocks. Both articles are bullish on the gold miners. But let's see what the market says about GDX, the gold mining ETF. The chart below shows GDX testing the 53 level three times over the last year.
After rallying strongly during the last year, GDX has again declined to test the 53 level. The gold miners can be very tricky. Back in the 1970s, the miners lagged badly as gold surged higher. Strangely, after gold topped out in 1980, the gold mining stocks did better.
