Technical Stock Market Report

The good news is:   All of the major indices were down last week, but the secondaries held up better than the blue chips and there was no significant build up of new lows.

The negatives: New highs declined sharply last week, falling from 315 Monday to 104 Friday on the NYSE and 192 Monday to 61 Friday on the NASDAQ.

The chart below covers the past 6 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.

The OTC NH low of a month ago was its lowest level in the past 2 years.

The next chart is similar to the one above except is shows the S&P 500 (SPX) in red and NY NH has been calculated from NYSE data.

NY NH was strong in the recent rally, rising to just a little under its high of the past 6 months.

These 2 charts illustrate the dichotomy in strength between the NASDAQ and NYSE.

AD lines are a running total of declining issues subtracted from advancing issues.  For various reasons they change in character over time, but sudden changes can be revealing.

The chart below covers the past 6 months showing the OTC in blue and an AD line calculated from NASDAQ data (OTC ADL) in green.

In January the OTC ADL was leading the OTC upward and peaked with the index in early February.  In the past month the OTC ADL has been lagging the index, indicating a narrowing of leadership in this recent rally.

The positives:  In spite of a down week for the indices, there was no build up of new lows.

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

NY HL Ratio fell a little last week, but is still at a very high 91%.

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

OTC HL Ratio rose above 80% last week and finished the week at a very strong 79.5%.

Conclusion: 

The market lost a lot of steam last week with new highs declining dramatically.  I view the rally from late May through last Monday as a spectacular end of month, beginning of month event that is over now.  However, we should get another one at the end of this month.

I expect the major averages to be lower on Friday June 20 than they were on Friday June 13.

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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.

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