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research report

Globe editors have posted this research report with permission of Phases & Cycles. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:

Let’s look at the indicators. The SPX, the NASD and the TSX appreciated 13.6 per cent, 19.8 per cent and 11.3 per cent, respectively, since October, 2020, lows and moved up in a narrow but rising up-channel. During this time, the percentage of stocks above their 10-week moving averages increased from 48 per cent to 84 per cent, and those above their 30-week moving averages increased from 56 per cent to 89 per cent.

At the same time, the number of stocks hitting new 52-week highs increased from zero to an average of 200 (not counting ETFs etc.) creating what is called an over/bought (o/b) condition. We know that o/b conditions can exist for a long time, and sometimes even longer than forecast, but sooner or later such conditions must give way to a minor correction. All indicators are likely to move ahead to new all-time highs in February, but a minor correction is quite likely to commence in mid-March.

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