First off, we’re in the thick of Summer. Traders are on vacation…volumes are thin. From a data standpoint, markets are still decidedly bullish. Let’s take a peek under the hood.
For my first chart, I like to first check-in with the Big Money Index. It measures buying and selling in stocks over a 5-week period. If it’s increasing, buying is strong. If it’s falling, selling is picking up.
It’s mapped over the S&P 500 (SPY ETF) and is trending sideways:
It’s been hovering in the upper 70s. It needs to pierce 80% before markets reach the overbought territory. Right now, we aren’t in danger of that…at least not this week.
My second chart looks at ETF trading. Buying in ETFs has been steady. You can see that in the ETF Buys and Sells chart below. It tracks the daily total of ETF buys and sells. Buying has been larger than selling for weeks:
You can expect a near-term pullback in stocks when there’s extreme ETF buying. That’s not happening right now. Prior peaks are seen above when there are big blue spikes.
But let’s keep going. Is stock buying heavy or light right now?
In my final chart, let’s look at stock activity by sector. Typically, when there’s > 25% of sector getting bought or sold, it requires a 2nd look. Right now, only Utilities saw notable selling (yellow area below) with 30% of the universe trading lower on out-sized volumes:
This chart shows that buyers are still in control and points to further upside for markets. Only when sellers come to town will my narrative change. For now, let’s enjoy the all-time highs.
Here’s the bottom line: 3 charts point to more upside for stocks. The Big Money Index is steady, buying in ETFs and stocks is healthy, too. Eventually that’ll change, but that’s not the case today.
A study showed that wearing a white doctor’s coat makes you smarter. Data is my white coat. It guides my market decision making. Market internals say to be bullish.
Disclosure: the author holds no position in SPY or the S&P 500 at the time of publication.
Learn more about the MAPsignals process here: www.mapsignals.com
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