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Technical Stock Market Report

June 20, 2015

The good news is: The Russell 2000 (R2K) and NASDAQ composite (OTC) both closed at all time highs on Thursday.

The negatives: The breadth dichotomy between the NASDAQ and NYSE markets continued last week with the NYSE much weaker than the NASDAQ.

The chart below covers the past 6 months showing the S&P500 (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 remained near its low of the past 6 months.

The positives: To illustrate the dichotomy mentioned above, the chart below is similar to the 1st chart except it shows the OTC in blue and OTC NH, in green, has been calculated from NASDAQ data.

OTC NH has been moving sharply upward for over a month.

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 50%, neutral level.

A modest decline in the number of NYSE new lows enabled NY HL Ratio to move above the neutral line late last week.

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 continued its rise, reaching 79%, its strongest level in 2 months.

Conclusion

The secondary indices have been outperforming the blue chip indices and NASDAQ breadth indicators have been outperforming NYSE breadth indicators. Not perfect, but not bad.

I expect the major averages to be higher on Friday June 19 than they were on Friday June 26.

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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.