Plenty of Noise, But Most Stocks Are Moving Higher

Our goal is to follow the trend rather than trying to pick turning points. The bulls get the benefit of the doubt

Key Takeaway: It’s not a risk free-market and the truth is it never will be. Our Bull Market Behavior Checklist points to broad strength and healthy participation. That helps us tune out the noise and follow the trend.

Among the potential distractions:

It’s Fed decision day and while the market anticipates a pivot, the Fed has provided lip-service but no action. Rate cut expectations continue to get pushed out.

Consensus Bulls are hanging out at their highest level ever. Sentiment is excessive, but the crowd has not (yet) turned.

The earnings revision trend is stuck below resistance as prices breakout. That divergence is unlikely to persist.

The claim is not that none of this matters. Rather, that should not overwhelm the reality that rally participation remains broad and trends continue to rise. According to data from All Star Charts, more than one-quarter of the stocks on the NYSE made a new high at some point in the past two weeks. That’s the best level in years.

Risks associated with rates, sentiment, and earnings will matter at some point, but for now our Bull Market Behavior Checklist argues for giving the rally, and the bulls that have fueled it, the benefit of the doubt.

If you are wondering about what’s next as last years leaders stumble, this chart (courtesy of

Grant H.

) does a good job of asking (and answering) some intriguing questions:

Keep reading for a summary of our Bull Market Behavior Checklist: