Technical Stock Market Report

April 23, 2016

The good news is: The secondaries have been outperforming the blue chips -- and the number of new lows has been insignificant.

The Negatives: There are not any serious negatives.

On the NYSE new lows have been in single digits, a little higher on the NASDAQ, but nothing worrisome.

The NASDAQ composite (OTC) was down a little last week, but the Russell 2000 small cap index was the strongest of what I consider the major indices.

New highs have come up a little short, but relatively are the strongest we have seen in a while.

The positives: While new highs have been disappointing, new lows have disappeared and nothing really bad will happen without a significant increase in new lows.

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 50%, neutral level.

OTC HL Ratio declined slightly but remains very strong at 71%.

The next chart below is similar to the one above except it shows the S&P 500 (SPX) in red and NY HL Ratio, in blue, has been calculated from NYSE data.

NY HL Ratio finished the week at a sensational 92%.


The shortage of new highs tells us this is not a strong market.

The shortage of new lows tells us there is little to worry about.

I expect the major averages to be higher on Friday, April 29 than they were on Friday, April 22.

Last week the OTC was down slightly while all of the other major indices were up slightly so I am calling last weeks positive forecast a tie.  This is the first time this year the indices have been split.  The latest I can remember.


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 (, FastTrack (, Quotes Plus and the Wall Street Journal (  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.
Silver has the highest electrical conductivity and heat of all metals.