Technical Stock Market Report

The good news is:  New lows remained at insignificant levels.

The Negatives:  NASDAQ breadth indicators continue to underperform NYSE breadth indicators.

The first chart covers the past six months showing the NASDAQ composite (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.

If this were a new bull market rather than a bear market rally OTC NH would be leading the way upward.

The next chart is similar to the one above except it covers the past year.  OTC NH has been deteriorating for quite a while.

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

The NYSE has a lot more interest rate sensitive issues than the NASDAQ and the yield on 10 yr treasuries has fallen to around 1.7%.  NY NH makes it look like we are in a new bull market.

The next chart is similar to the one above except it covers the past year.

NY NH looks good here, leading the way upward.  There are a lot of Muni bond funds on the NYSE new high list.

The positives:  New lows have disappeared.

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

OTC HL Ratio held above the neutral level.

The next 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 a little last week, but finished the week at a very strong 89%.

Conclusion

The dichotomy between NYSE and NASDAQ breadth indicators continues.  I consider the NASDAQ breadth indicators more important, because they are not “contaminated” with the high percentage of interest rate sensitive issues that the NYSE is.  As it sits right now, the NASDAQ breadth indicators are mediocre, while the NYSE breadth indicators are sensational.  And, next week seasonality is strong.

I expect the major averages to be higher on Friday April 8 than they were on Friday April 1.

Last weeks positive 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.