Technical Stock Market Report

The good news is:   The blue chip indices hit all time highs in the past week.

The negatives: In the past week the S&P 500 (SPX) closed at an all time high and the Dow Jones Industrial Average (DJIA) missed its all time high by just 3 points.  The Russell 2000 (R2K), representing the secondaries missed its all time high by 1.3%.  The index highs were not confirmed by the number of new highs on any exchange.

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 is near its low for the past 6 months.

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

NY NH was a little stronger than OTC NH last week, but was closer to its low for the past 6 months than its high.

The next chart covers the past month showing all of the major indices and the S&P mid cap index.

The secondaries lead both up and down and for the past month they have been heading down.

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 71% last week.

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.

What, me worry?

NY HL Ratio rose to an extremely strong 94% on Friday. 

 Money Supply (M2)

The money supply chart was provided by Gordon Harms.

Money supply growth has been on trend for the past few weeks.

Conclusion

The market has been following the seasonal pattern quite closely and that pattern calls for a top around the 3rd week of April.  New highs have been deteriorating for months while other breadth indicators began deteriorating about a month ago.  There is every reason to expect the seasonal pattern to play out as it has in the past.

I expect the major averages to be higher on Friday April 11 than they were on Friday April 4.

Last week the OTC was down while all the other major indices were up 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 (qp2.com) and the Wall Street Journal (wsj.com).  Historical data is from Barron's and ISI price books. Â 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.