Technical Stock Market Report

The good news is:   New lows remained insignificant on the NASDAQ.

The negatives:  New lows, while still at benign levels, increased last week and new highs remained minimal.

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 the month.

After failing to confirm  the OTC high of a week ago, OTC NH resumed its decline.

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

NY NH fell sharply last week.

The next chart covers the past 6 months showing the SPX in red and a 10% trend of NYSE new lows (NY NL) in blue.  NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good).

This is the most alarming of all of the charts.  If  NY NL continues falling sharply, prices will follow.

The positives:  New lows remained at non threatening levels, but have been increasing.

The chart below covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs / (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 neutral 50% level.

NY HL Ratio fell sharply last week, but remains positive by a hair.

The next chart is similar to the one above except is shows the OTC in blue and OTC HL Ratio, in red, has been calculated from NASDAQ data.

OTC HL Ratio also fell last week, but its fall was arrested in positive territory.

This is the first time in a long time that NASDAQ derived breadth indicators have been stronger than those from the NYSE.

Money Supply (M2): 

The money supply chart was provided by Gordon Harms.

M2 growth picked up a little last week.

Conclusion:

The breadth indicators are overwhelmingly negative, but the market has been following the seasonal pattern with a positive bias.  The seasonal pattern next week is on average positive.

I expect the major averages to be higher on Friday September 20 than they were on Friday September 13.

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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.

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