Technical Stock Market Report

June 21, 2014

The good news is:  The blue chip indices closed at all-time highs on Friday and the NASDAQ composite (OTC) closed at a multi-year high.

The negatives: The market is overbought.  Most of the major indices have been up for 6 consecutive days.

New highs picked up last week, but remain closer to their lows of the past 2 years than their highs.

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 is far from confirming Friday's high.

 

The next chart is similar to the first one except it covers the past 2 years.

 

The next chart is similar to the first one except it shows the S&P500 (SPX) in red and NY NH has been calculated from NYSE data.

NY NH has been stronger than OTC NH.

 

The next chart is similar to the one above except is shows the past 2 years.  NY NH is also closer to its low of the past 2 years than its high.

The positivesVolume picked up last week, but remains relatively low.  Down side volume and new lows have been practically non-existent.  There is not much buying, but no selling.

The chart below covers the past 6 months showing the 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 horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the neutral 50% level.

NY HL Ratio rose to an extremely high 95%.

 

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

OTC HL Ratio was unchanged at a very strong 79.5%.

 

Conclusion:

The market has been surprisingly strong for a seasonally weak period.

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

Last week’s 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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