Back in September,
when I last reported on the "P Momentum" model, things were starting to show a significant turn in momentum - to the point that all four time frames of the model would be above their respective moving average indicating that the next leg of the bull market was underway. Since that that time, the
S&P has surged from 1109 to a close over the 1160 today. With this move, the momentum has all shifted into positive territory and each of the momentum components are over their key moving averages. Only the long term ROC still has a negative momentum moving average. This shift to an above zero bound behavior for all four components is typical of a bull market - the last two from the late 1980s to 2000 and 2003 thru 2007 featured such.
With the move over zero bound though, now the discussion moves from how far we are from oversold to how far we have to go to we are overbought. Further, there are two different types of momentum moves we see during bulls - one that features trade between the 5-35% momentum range and the excessive ones that are above this range. As this market climbs, all the components are in the normal range. Based on the movement of the past 20 days, if it were to continue this momentum, we will fast approach the excessive range.
However, we are not at that juncture at this point and I argue that the S&P has attained a normal bull market status - for the first time since 2007.
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