Demand is Winning the Battle

There are many old sayings on Wall Street. One of my favorite is “let the trend be your friend”. What’s amazing is that these sayings have been around for many years because they have an uncanny knack for being true. Another favorite is “bulls make money, bears make money, while pigs get slaughtered”.
The rally in the market over the past five months has been much welcomed by many. To some though, it has been inexplicable, and to others it has been downright baffling. Judging by the talking heads, the fundamental analysis or economic outlook, for that matter, has simply offered no ‘logical’ explanation or ‘warning’ that investors would be in a buying mood. This is why I find tremendous value in following soulless indicators, like the NYSE Bullish Percent and relative strength, to guide my investment allocations.

I find these indicators to be useful. For example, the primary market indicator (NYSE Bullish Percent - BPNYSE) reversed into a column of X’s on March 12th of this year indicating that demand was taking charge, and despite a brief period in a column of O’s (supply) in June and July, the BPNYSE has been in a column of X’s (demand), suggesting an offensive posture for about 80% of the time since March. I don’t begin to profess to know why demand was winning the battle back in March, and we typically don’t find out for some time after the fact, but what I do know is that the irrefutable laws of supply and demand are in force on Wall Street the same way they affect produce in the supermarket. Further, we know that when there are more people willing to buy a stock than there are willing to sell, the price of the stock must go up. That being the case, it appears that there are many investors out there looking to get more invested, and even though our indicators are at high levels the offensive team remains on the field.

Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.