Technical Stock Market Report

The good news is:  New highs on the NYSE increased last week in spite of another rough week for the major indices.

The Negatives:  There have been very few new highs on the NASDAQ for a long time.  It is a different story on the NYSE, however, nearly all of the new highs on the NYSE are interest rate sensitive issues.  With 10yr. treasuries yielding 1.77%, yields are hard to find.

Looking over the sectors, most of them deteriorated badly last week.  The exceptions were precious metals, utilities, consumer products and financials.  While reviewing the sectors I was reminded of the old saying “Sell in May and go away.”

The chart below covers the past 6 months showing the NASDAQ composite (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 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.

OTC HL Ratio fell into negative territory last week.

The Positives:  New lows picked up a little last week, but remained below threatening levels while new highs were strong on the NYSE and weak on the NASDAQ.

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 fell last week, but finished the week at a very strong 85%.

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 finished the week at its highest level in over a year.

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

This is not a positive looking chart.  I included it to show the contrast between what was happening on the NYSE and the NASDAQ.

Conclusion

The breadth indicators deteriorated last week and seasonality for the coming week has been weak.

I expect the major averages to be lower on Friday May 13 than they were on Friday May 6.

Last weeks positive forecast was a miss.

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.