The latest market statistics posted by Sentimenttrader in his “The Everything Rally” were very revealing and encouraging if you are a stock market bull. Here are some of the highlights from his post

Total return stock and bond indexes are hitting all-time highs at the same time. They cover an array of stocks and bonds, suggesting extreme breadth of buying interest, as noted by Bloomberg.

When they’ve all hit records together, it has been an especially good longer-term sign for stocks. They rallied almost universally after these signals and over the next 2-6 months, there was only one date that showed a loss of more than 1%. For bonds, it wasn’t quite as consistently positive, but all of them showed gains most of the time across all time frames, with returns mostly above random.

Quick cycle

Yet again, stocks showed a tendency to cycle quickly from a selloff to new highs. For the S&P 500, it went from a 50-day low multi-year high in less than three weeks, nearly a record going back to 1928.

The median cycle from low to high has taken 34 days, so this was nearly three times faster than usual. Over the next month, it seems like sellers had a strong tendency to give up. From 1-4 weeks later, there was only a single loss, and the risk/reward was impressively skewed to the upside.

Dollar downtrend

The U.S. dollar’s 200-day average has been rising for a year, but the late-week selling has pushed the buck to a multi-month low and below its average. This has led to a rebound in the dollar in the past, but half of them didn’t last.

It’s important to temper any giddiness just because you are investing with the higher probability outcome. It does not always turn out in your favor as we so aptly learned during last December’s market double bottom expectation. There are never any guarantees when it comes to investing but it appears as the higher probability resolution of the current consolidation and test of prior highs should end with stocks continuing to push on to further new highs and remain in its long-term uptrend.

The dollar statistics are anything but compelling or confidence building so any investment you own that is strongly correlated to the dollar’s movement (commodities, interest rates, FX currency trades) should be viewed as suspect (guilty until proven otherwise) and as such, managed with a tighter leash.