Ian Woodward's Investing Blog

Reading the Tea Leaves with %B x Bandwidth

Stephen asks an astute question at a critical point in this Rally:

Ian or anyone,

We have a sea of green on the %B x %B Bandwidth chart. This is good.  Is the fact that the %B chart is showing us a Sweet 16 condition a reason for concern or does the sea of green override this concern?


I’m watching the golf while putting this together so I hope that the pictures speak for themselves:

We are at that stage where we are Pausing to Refresh, sitting with an Island Gap below us which is asking to be filled.  The Rally is at a vulnerable point where the promising move so far can turn out to be a Fakey or the Bulls are determined to make this a meaningful Santa Claus Rally:

Understand that it is hardly ten days ago that we were in the dumps with 53% of the S&P 1500 Stocks below the Lower BB.  So this rise has been meteoric to say the least, and thereby lies the concern…too far too fast?

As a result, the internals are all looking rosie:

Don’t worry about reading the numbers, just look at the colors and my comments on the next two charts for Markets and ETFs:

Net-net:  Next week’s action is crucial to deciding whether we continue or have yet another Fakey to contend with.  Now for the Dark Side of the Equation:

And Finally, Watch for the Island Gap to be filled, or we trot on up to attack the resistance at the 200-dma one more time:

Best Regards, Ian.

2 Responses to “Reading the Tea Leaves with %B x Bandwidth”

  1. Paul R Says:

    All this while watching a golf game Ian, amazing! BTW, do your wife’s roses still have flowers or were they blown into the Pacific this week?


  2. ian Says:

    We were lucky here in Sunny Palos Verdes. Terrible damage in the “Inland Empire” which would include Pasadena, but as usual we are lucky to live in this little bit of Heaven.

    May I be the first to wish you a Happy Birthday for tomorrow!


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