Technical Stock Market Report

September 12, 2015

Technical Stock Market Report

The good news:  The secondaries have been outperforming the blue chips.

The negatives:  The first chart shows the S&P500 (SPX) in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed vertical lines have been drawn on the 1st trading day of each month.  Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the 50%, neutral level.

Prices have risen over the past 3 weeks, but this indicator has remained at an extremely low level.

The next chart is similar to the one above except it covers the past year.

You can see how the indicator typically moves sharply upward when prices are coming off a low.  That has not been happening this time.

The next 2 charts are similar to the first 2 except they show the NASDAQ composite (OTC) in blue and OTC HL Ratio has been calculated from NASDAQ data.

OTC HL Ratio has been stronger than NY HL Ratio, but it has remained in negative territory.

Both OTC HL Ratio and NY HL Ratio have been in a well defined down trend for the past 3 months.

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green

NY NH has continued to fall in spite of the rally in prices.

The next chart is similar to the one above except it shows the OTC in blue and OTC NH, in green has been calculated with NASDAQ data.

The decline of OTC NH has been arrested, although at a very low level.

The positives

Bottoms are usually defined by the disappearance of new lows, but, this time that has not been working out very well

The chart below covers the past 6 months showing the SPX in red and a 10% trend of NYSE new lows (NY NL), in blue.  NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good).

NY NL began moving sharply upward nearly 3 weeks ago, but prices, although rising have not been keeping up.

The next chart is similar to the one above except it covers the past year for a longer term perspective.

The next chart is similar to first one in this group except it shows the OTC in blue and OTC NL, in orange, has been calculated from NASDAQ data.

The OTC has been doing a little better job of following OTC NL upward.

Money supply (M3)

The money supply chart was provided by Gordon Harms.

Money supply growth has been holding above its trend.

Conclusion

New lows have declined, but not disappeared as they typically do coming off a bottom making me suspicious of the recent rally.

I expect the major averages to be lower on Friday September 18 than they were on Friday September 11.

Last weeks negative forecast was a miss.

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Disclaimer: Charts and figures presented herein are believed to be reliable but I cannot attest to their accuracy.  Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus and the Wall Street Journal (wsj.com).  Historical data is from Barron’s and ISI price books.  The views expressed dare provided for information purposes only and should not be construed in any way as investment advice.  Furthermore, the opinions expressed may change without notice.

Mike Burk began developing equity trading systems in the early 1980's.  Through the 1990's he marketed an equity trading system called MIRAT based on breadth indicators, but, primarily new lows.  In the early days of this century he developed the seasonal trading strategies currently used by Alpha Investment Management of Cincinnati.  Mr. Burk has been writing equity market newsletters since the early 1990's.  During the past 10 years the letter observes both breadth and seasonal strategies.
 
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