Technical Stock Market Report

The good news is:   The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed at all-time  highs last Friday and the NASDAQ composite closed at a multi-year high on Tuesday.

The negatives:   New lows hit their highest levels in 3 weeks and the secondaries were weaker than the blue chips last week.  New highs picked up early in the week before falling off sharply on Friday.

The chart below covers the past 6 months showing the 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 the month.

OTC NH failed to confirm the index high on Tuesday.

The next chart is similar to the one above except it shows the SPX in red and NY NH has been calculated from NYSE data.

NY NH also failed to confirm the all time SPX high on Friday.

The positives:  New lows remained at non-threatening levels.

The chart below covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs / (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 last week, but finished the week at a very strong 84%.

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

OTC HL Ratio also fell last week, but is still strong at 66%.

Money Supply (M2)

The money supply chart was provided by Gordon Harms.

M2 growth continued to fall last week.

Conclusion

Last week there was deterioration in the breadth indicators, while the blue chips moved to all-time highs.  Seasonally the next few weeks have been very weak.

I expect the major averages to be lower on Friday September 12 than they were on Friday September 5.

Last week the blue chips were up a little while the secondaries were down a little so I am calling last week’s positive forecast a tie.

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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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