Technical Stock Market Report

The good news is: In spite of a down week, new lows remained minimal on the NYSE.

The negatives:  Early last week the blue chips rallied to within less than 1% of their all time highs while the secondaries came up short and then underperformed in the subsequent fall.

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 barely moved when the OTC rallied for 6 consecutive days ending last Tuesday.  OTC NH is at its lowest level in over a year.

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

NY NH held up a little better, but remains much closer to its low while the SPX is still very near its all time high.

The positives:  Breadth on the NYSE has held up remarkably well.

The chart below 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% increments for the indicator, the line is solid at the neutral 50% level.

NY HL Ratio rallied to an extremely strong 90% before easing to finish the week at a still strong 82%.

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 rallied to above the neutral line and finished the week at a modestly positive 53%.

Conclusion: The NYSE breadth indicators are still strong so we may see a little end of month – beginning of month rally next week, but otherwise the market is following the average for the 2nd year of the Presidential Cycle quite closely so I expect the next several months to be down.

I expect the major averages to be lower on Friday May 2 than they were on Friday April 25.

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.

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