Technical Stock Market Report

The good news is:  The secondaries have been outperforming the blue chips.

The negatives:  New lows reached uncomfortably high levels last week, high enough to trigger a Hindenburg Omen.  A Hindenburg Omen was NOT triggered because there were not enough new highs.

The breadth indicators on the NYSE have been much weaker than those on the NASDAQ.  Fixed income related issues have been doing poorly because of the assumption the FED will be raising interest rates soon.  Fixed income issues account for about half of the issues traded on the NYSE.

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

NY NH has been falling for the past 6 weeks and failed to confirm the all time high in the SPX about 2 weeks ago.

The next chart 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 remained in modestly negative territory last week.

The positives:  The secondaries handily outperformed the blue chips last week.

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and a 40% trend of NASDAQ new highs divided by (new highs + new lows), OTC HL Ratio, in red. 

OTC HL Ratio recovered last week to a modestly positive 57%.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend of NASDAQ new highs (OTC NH) in green.

OTC NH has been holding up pretty well.

Money Supply (M2)

The money supply chart was provided by Gordon Harms.

M2 growth is holding above trend.

Conclusion

The market is split the secondaries are stronger than the blue chips and the breadth indicators are all close to neutral.

I expect the major averages to be higher on Friday March 20 than they were on Friday March 13.

Last week the secondaries were up and the blue chips down so I am calling last weeks 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.