Technical Stock Market Report

The good news is:  The major indices recovered most of their losses of the previous week.

The negatives:  The new high indicators continue to reveal a pattern of declining highs.

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 recovered a little last week, if the index makes a new high anytime soon it will be accompanied by another in the series of declining 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 a pattern similar to OTC NH.

The positives:  The number of new lows remains minimal.

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 recovered to 87% last week.  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 recovered to 84%. 

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

Money supply growth continued its decline last week.

Conclusion:  There has been continued deterioration in the new high indicators suggesting the seasonal pattern of a top in the next few weeks is likely to materialize.

I expect the major averages to be lower on Friday March 28 than they were on Friday March 21.

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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.