Technical Stock Market Report

The good news is:  Last week the secondaries outperformed the blue chips for the first time in quite a while.

The negatives:  The advance – decline lines (ADL) have been persistently weak and new lows have remained high.

New lows rose on both the NYSE and NASDAQ over the past week.  On Friday there were 85 new lows on the NYSE and 76 on the NASDAQ.  Both of those numbers are high enough for concern.

ADL’s are a running total of declining issues subtracted from advancing issues. 

The chart below covers the past 6 months showing the NASDAQ composite (OTC) in blue and an ADL calculated from NASDAQ issues in green.  Dashed vertical lines have been drawn on the 1st trading day of each month.

Ideally the ADL line would be running parallel to the index line.

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

The NYSE ADL has been stronger than the OTC ADL, but it has also come up short for the past 2 weeks.

The positives:  You have to go back to mid July to find more NASDAQ new highs than we had on Friday.

The chart below covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new highs (OTC NH), in green.

OTC NH continued its upward move.

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

NY NH has been the stronger of the new high indicators.

The next chart 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% levels for the indicator, the line is solid at the 50%, neutral level.

NY HL Ratio had a volatile week finishing at 58% very near where it was a week ago.

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 was the stronger of the two HL Ratio indicators for the first time in a month.

Money supply (M2)

The money supply chart was provided by Gordon Harms.

Money supply growth jumped up to its long term trend last week.

Conclusion

New lows have been increasing, the AD lines have been weak and Seasonality is weak for the next 2 weeks.

I expect the major averages to be lower on Friday November 13 than they were on Friday November 6.

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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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