Technical Stock Market Report
The good news is: The NASDAQ composite (OTC) closed at a multi year high on Friday and the rest of the major indices closed at all time highs.
The negatives: New highs picked up at the end of last week, but remain well below levels seen earlier in the year when the indices were lower.
The chart below covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH) in green. Dashed vertical lines have been drawn on the 1st trading day of each month.
OTC NH has been making progressively lower highs most of this year.
The next chart is similar to the one above except is shows the S&P500 (SPX) in red and NY NH, in green, has been calculated from NYSE data.
NY NH also failed to confirm the new high in the index.
The positives: New lows have remained at non threatening levels.
The chart below covers the past 6 months showing the OTC in blue and a 40% trend (4 day EMA) of NASDAQ new highs divided by (new highs + new lows), (OTC HL Ratio) in red. Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the neutral 50% level.
OTC HL Ratio bounced around the 80% level last week and closed at 84% on Friday.
There are trading systems that impose a No Sell Filter when variations of this indicator are above 80%.
The next chart is similar to the one above except it shows the SPX in red and NY HL Ratio, in blue, has been calculated from NYSE data.
NY HL Ratio remains positive, but appears to be in a falling trend.
Money Supply (M2): The money supply chart was provided by Gordon Harms.
Money supply growth continued to declined last week.
Conclusion: The breadth indicators failed again to confirm the new index highs, seasonality for next week is mixed, but the Fed continues to chip in $85 Billion a month.
I expect the major averages to be higher on Friday November 29 than they were on Friday November 22.
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Disclaimer: Mike Burk is an employee and principal of Alpha Investment Management (Alpha) a registered investment advisor. Charts and figures presented herein are believed to be reliable but we cannot attest to their accuracy. Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) 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.