Technical Stock Market Report

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 on Thursday.

The negatives:  The most important marks of a bottom are the abrupt disappearance of new lows and downside volume.  Both have declined in the past 3 weeks, but not as sharply as you would expect.

The chart below covers the past 6 months showing the S&P 500 (SPX) in red and a 5% trend (39 day EMA) of NYSE downside volume, (NY DV) in maroon.  NY DV has been plotted on an inverted Y axis so decreasing downside volume moves the indicator upward (up is good).  Dashed vertical lines have been drawn on the 1st trading day of each month.

The SPX closed at an all time high on Friday while NY DV has remained at a relatively high level (low on the chart).

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

The picture on the NASDAQ is similar to the NYSE.

The positives:  New highs picked up nicely last week.

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.

In the past 3 weeks, OTC NH has gone from its lowest level in nearly 3 years to very near its highest level of the past 6 months.

The next chart is similar to the one above except is shows the SPX in red and NY NH has been calculated from NYSE data.

NY NH has exceeded its high of the August – September rally, but has a way to go before reaching its high of the last 6 months.

The next chart covers the past 6 months showing the SPX in red and 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 of the indicator, the line is solid at the neutral 50% level.

NY HL Ratio held near 80% last week, strong.

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

OTC HL Ratio declined a bit, but finished the week at a comfortable 67%.

Money Supply (M2)

The money supply chart was provided by Gordon Harms.

M2 growth continued its recovery last week.

Conclusion

The continued high level of downside volume is a little troubling, and the secondaries did not recover to new highs, but everything else looks pretty good.

I expect the major averages to be higher on Friday November 14 than they were on Friday November 7.

Last week the Russell 2000 was down slightly while everything else was up, so I am calling last weeks positive forecast a tie.

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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.