Technical Stock Market Report

May 21, 2016

The good news is:  NYSE new lows remained at non-threatening levels.

The Negatives:  NYSE new highs collapsed last week after hitting sensational levels the week before.  NASDAQ new highs have been weak for a long time.

The first chart covers the past 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs in green.  Dashed vertical lines have been drawn on the 1st trading day of each month.

NY NH fell sharply last week.

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

OTC NH headed downward from a much lower level.


The next chart shows 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 fell deeper into negative territory last week.

The positives:  Last week the secondaries were a little stronger than the blue chips and, for most of the week NYSE new highs outnumbered new lows.

The chart below 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 declined sharply last week, but finished the week in positive territory.


Most of the breadth indicators deteriorated last week and Seasonality for the coming week is mixed.

I expect the major averages to be lower on Friday May 27 than they were on Friday May 20.

Last week the DJIA was down slightly while the other major indices were up slightly so I am calling last week's negative forecast a tie.

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.
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