The relative ratio of the Momentum Index versus the S&P 500 Index has reached a fresh 41-month new high.
Here’s the chart:
Let's break down what the chart shows:
The black line in the top panel shows the relative ratio of the Momentum Index versus the S&P 500 Index.
The redline is the 200-day moving average of the relative ratio.
The blue line is the 50-day moving average of the relative ratio.
The greenand redline in the bottom panel represents the daily Relative Strength Index (RSI) for the relative ratio. When the line is green, it indicates that the daily RSI is in a bullish regime, while a red line signifies that the daily RSI is in a bearish regime.
The Takeaway: This ratio just broke out to its highest level since December 2021. That tells me something simple… Investors are getting more aggressive.
They’re buying strength. They want exposure to risk.
That’s what happens in bull markets.
When this ratio is rising, it means stocks with strong momentum are doing better than the broader market. That’s what you want to see if you’re bullish.
Here’s what stands out on the chart:
The ratio is at a 41-month high.
It cleared a key support/resistance zone that goes back to 2017.
It’s above both its 50-day and 200-day moving averages.
Both moving averages are sloping up.
The ratio is in a strong bullish momentum regime.
None of this is bearish. In fact, it’s exactly what you’d expect to see in a healthy uptrend.
Some people say the market feels stretched. That may be true in parts. But the behavior under the surface is strong. Risk appetite is still alive.
So here’s the real question: are you positioned with what the market is rewarding?
Because right now, it’s rewarding momentum stocks!
Grant Hawkridge | Chief Aussie Operator, All Star Charts
Need a full trading toolkit that actually helps you make moves? All Star Charts Premium gives you daily trade ideas, proprietary scans, and access to our entire analyst team. If you're serious about leveling up your strategy,start here.
If you find my content valuable, I would greatly appreciate it if you could share it with your friends, family, and colleagues. Your help in spreading the word is invaluable in supporting our work. Thank you to all of you who share!
