• 267 days Could Crypto Overtake Traditional Investment?
  • 272 days Americans Still Quitting Jobs At Record Pace
  • 273 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 277 days Is The Dollar Too Strong?
  • 277 days Big Tech Disappoints Investors on Earnings Calls
  • 278 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 279 days China Is Quietly Trying To Distance Itself From Russia
  • 280 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 284 days Crypto Investors Won Big In 2021
  • 284 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 285 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 287 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 287 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 291 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 292 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 292 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 294 days Are NFTs About To Take Over Gaming?
  • 294 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 298 days What’s Causing Inflation In The United States?
  • 299 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Technical Market Report

The good news is:
 • The NYSE AD line hit a new cycle high last week.
 • The number of new lows remains insignificant.
 • Both the NYSE and NASDAQ new high indicators are heading upward.

This implies new cycle highs in the blue chip indices in the next 2-6 weeks.

With the high percentage of fixed income related issues trading on the NYSE and stocks and bonds running out of synch for several years, there is good reason to be suspicious of the current value of the NYSE new high indicator. That said, let's have a look at it:

The chart below shows the Dow Jones Industrial Average (DJIA) in red and a 10% trend (19 day EMA) of NYSE new highs (calculated on a 52 week trailing basis as reported by the exchange) (NH) in green. I have put dates on several of the peaks to help with the time perspective. The indicator does not adjust for the total number of issues traded so I have included the figures on the selected dates:

Date Value of NH Issues Traded NH as a % of issues traded
Nov 82 219 1940 11%
March 86 288 2040 14%
July 97 337 3440 10%
Jan 2004 445 3430 13%

Notice the indicator peaks well in advance of a price peak.

Take a closer look at the marked periods:

The chart below shows the period before and after the 1982 peak. The indicator peaked at about the half way point of the price run.

The next chart shows the March 86 peak of the indicator followed by a peak in prices about a year and a half later.

The next chart shows the indicator peak in July of 1997 and the price peak two and a half years later in January 2000.

The last chart in this series shows where we are now.

The indicator peaked in late January suggesting there is a lot more room on the upside.

What about next week?

Nearly all of the charts are telling the same story as the one below. The indicator (blue) tries to force the activity of the index, in this case the Russell 2000 (red), into a 25 day cycle. The indicator is nearly, but not quite maxed out.

I pay a lot of attention to the direction of the NASDAQ new high indicator (10% trend of NASDAQ new highs) shown in the chart below. It has turned upward.

There is no evidence that the up move of the past 2 weeks is ending, but the recent (past 2 months) rhythm of the market suggests it does not have much time left. There are no notable seasonal factors at play next week.

I expect the major indices will be higher on Friday March 12 than they were on Friday March 5.

Back to homepage

Leave a comment

Leave a comment