Technical Stock Market Report

The good news is:   Most of the major averages closed at all time or multi year highs during the past week.

The negatives:  New highs have been picking up, but there have been fewer of them than at recent highs, indicating narrowing leadership.

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.

OTC NH has been rising sharply for the past month, but remains well below its earlier levels when the index was hitting new highs.

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

NY NH has also had progressively lower highs since last October.

The positives: New lows were in single digits most of last week.

The chart below covers the past 6 months showing 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 neutral 50% level.

OTC HL Ratio rose a bit to 94.4% last week, its highest level in the past 6 months.

There are trading systems that impose a No Sell Filter when variations of this indicator are above 80%.

The next chart 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 rose to 95.3%. 

Money Supply (M2):  The money supply chart was provided by Gordon Harms.

Money supply growth has declined a bit over the past few weeks.

Conclusion:  The market has been following the average seasonal pattern pretty closely and that pattern calls for another month of new highs.

I expect the major averages to be higher on Friday March 14 than they were on Friday March 7.

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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 (qp2.com) 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.