Technical Stock Market Report

April 4, 2015

The good news is:  The small caps have been outperforming the blue chips.

The negatives:  In a strong market new highs will often increase on down days.  Currently, that is not the case.

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

The SPX was up slightly last week while NY NH fell.

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

The OTC was down 0.09% last week while OTC NH fell pretty sharply.

The positives:  New lows remained at insignificant levels last week.

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 neutral 50% level for the indicator.

OTC HL Ratio recovered to a comfortable 66% last week.

The next chart is similar to the one above except is shows the SPX in red and NY HL Ratio, in blue, has been calculated with NYSE data.

NY HL Ratio recovered to a strong 81%.

Money supply (M2)

The money supply chart was provided by Gordon Harms.

Money supply growth has leveled off to its trend.


Indications from the breadth indicators and seasonality are indecisive, however relative strength of the secondaries over the blue chips is a positive.

I expect the major averages to be higher on Friday April 10 than they were on Thursday April 2.

Last the OTC was down slightly while the other major broad based indices were up so I am calling last week’s positive 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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