Technical Stock Market Report

The good news is:  The S&P500 (SPX) closed within a point of its all-time high Friday.

The Negatives:  The market is overbought.

The SPX closed near its all-time high while 10 yr. treasury yields danced around all-time lows.  Bizarre.

The positives:  The number of new lows remained insignificant while new highs picked up a bit.

The first chart covers the past 6 months showing the NASDAQ composite (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 vertical lines have been drawn on the 1st trading day of each month.  Dashed horizontal lines have been drawn at 10% levels for the indicator, the line is solid at the 50%, neutral level.

OTC HL Ratio finished the week at a very strong 76%.

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 finished the week at 92% very strong.

Conclusion

The major indices are up 6% - 8% over the past eight trading days, while US Treasury yields are at or near all-time lows -- and some sovereign debt (Germany & Japan) have negative yields.  Both fixed income and equity markets have left ominous tracks…and it is difficult to imagine a pleasant outcome.

I expect the major averages to be lower on Friday July 15 than they were on Friday July 8.

Last week’s negative forecast was a miss.

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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.