Technical Stock Market Report

Mike Burk
June 4, 2016

The good news is: New highs picked up last week and the secondaries were stronger than the blue chips.

The Negatives: There are no significant negatives.

NASDAQ new highs came up a little short, but new lows have all but disappeared.

The positives: The missing element of the recent rally has been NYSE new highs and last week as the yield on 10 yr treasuries fell below 1.7%, we got some.

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

NY NH turned sharply upward last week.

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

OTC NH continued to move sharply upward.

The next chart shows 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 50%, neutral level.

OTC HL Ratio finished the week at a very strong 72%.

The 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 finished the week at a sensational 94%.

Conclusion

With new highs rising and the secondaries outperforming the blue chips, the market is in pretty good shape.

I expect the major averages to be higher on Friday June 10 than they were on Friday June 3.

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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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