• 288 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 290 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 690 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 700 days Big Tech Disappoints Investors on Earnings Calls
  • 701 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 703 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 707 days Crypto Investors Won Big In 2021
  • 707 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 708 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 710 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 714 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 717 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Lower Peaks on NYSE New Highs. What Does it Mean?

Some indicators are hard to decipher, others are accurate some times, and some times not.

For instance, take the New York Stock Exchanges daily New Highs ... symbol: YHIN (on some data feeds).

Since the middle of 2009, the NYSE's New Daily Highs has had a good correlation with the stock market. For instance, take today's two and a half year chart that we posted below.

First note that we have two horizontal lines in red. One is at a value of 100, and the other is at a value of 50. When you see the daily number of New Highs close below 100, start to pay attention. When it drops below 50, the market corrects ... see the two areas with the red circle. And then ... back above 100 is typically associated with market rallies again.

Now, take a look at something else that is going on in this chart ...

Take a quick look at labels 1, 2, and 3. What do you notice when you compare the level of New Highs with the levels of the S&P 500?

What is obvious, is that the New Highs are attaining lower peaks as the S&P is reaching higher peaks. From this chart, one cannot say when label 3 will finally hit its peak, but one can say that it is a lower peak so far and that its daily closes have been holding above that important 100 level.

What does this say?

That as time goes on, fewer and fewer stocks are bargains? Or, that investors are having trouble finding stocks that have a high probability of having a great run up? Actually, both are correct. As the peaks become lower and lower over time, there will obviously be a point where there are just not enough good potential stocks to buy that could power up a sustainable rally. And then ... the odds are that we shift back to a Bear Market.

Is there a time when the NYSE's New Highs is not a good indicator?

One of the times that it does not work well, is just before the market is transitions from a Bear to a Bull market. During such times, stocks can't make New Highs yet because sellers still have stocks in a bottoming process. However, it is at such times that the Institutions typically come in, see the bargains, and move to Accumulation on select stocks ahead of the crowd. FYI ... they only move to Accumulation after they see a high odds probability of an economic pick up in the near future.

S&P 500 New Highs

 

Back to homepage

Leave a comment

Leave a comment