Technical Stock Market Report

The good news is:  The market has had two consecutive winning weeks with the secondaries outperforming the blue chips.

The Negatives:  New lows have remained a little high, especially on the NASDAQ where new lows outnumbered new highs every day last week except Monday.

The first chart 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 rose a bit last week, but remained below the neutral level.

The positives:  On the NYSE new highs outnumbered new lows on 3 of the 5 days.

The 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 managed to climb into positive territory last week.

The next chart covers the past 6 months showing the SPX in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue.  NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good).

NY NL continued its sharp move upward.

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

OTC NL is showing a similar pattern to NY NL.

The next chart covers the past 4 years showing the SPX in red and a 5% trend (39 day EMA) of NYSE volume of advancing issues (NY UV) in green.  Dashed vertical lines have been drawn on the 1st trading day of each year.

Since the 1st of the year we have been seeing the highest volume of advancing issues in over 4 years.

Money supply (M2)

The charts were provided by Gordon Harms.

Money supply growth leveled off last week.

Conclusions

New lows continued to decline and the secondaries continued to lead the blue chips upward last week.

I expect the major averages to be higher on Friday March 4 than they were on Friday February 26.

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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.