• 15 hours How The Stock Market Predicts Electoral Victory
  • 23 hours Tesla's "Battery Day" Could Deal A Blow To Cobalt Miners
  • 2 days New TikTok Deal Hopes To Bypass National Security Concerns
  • 2 days Where Will Gold Go From Here?
  • 3 days COVID-19 Is Fueling A Pastic Waste Crisis
  • 3 days Gold Output Set To Decline
  • 4 days Uber And Lyft Look To Go Electric
  • 5 days COVID-19 Is Crushing Palladium Demand
  • 6 days This ‘Once-Boring’ Tech Company Is Now Super Hot
  • 7 days Will Air-Based Protein Be Our Future Food?
  • 7 days Google Pledges To Go Carbon-Free By 2030
  • 8 days A New Twist In The TikTok Saga
  • 8 days Gold Inches Closer To $2,000
  • 9 days Delivery Drones Are Coming Sooner Than You Think
  • 9 days Traders See More Volatility Ahead For Commodities
  • 10 days How COVID-19 Is Transforming The World's Sovereign Wealth Funds
  • 10 days Electric Vehicle Demand Set To Outpace Battery Metal Production
  • 11 days Copper Continues To Outperform
  • 12 days The Jury Is In: ESG Is A Megatrend Now Worth $250B
  • 12 days Today’s Young Adults Aren’t Leaving the Nest
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  1. Home
  2. Markets
  3. Other

What 'Lies' Beneath

Although the S&P 500 made a lower low last week, a major fly in the ointment with regards to proclaiming, "Come on in - the water's fine" - is the realization that it also registered a lower low for the NYSE New Highs - New Lows calculation. And while today's market environment has been rewriting the annals of comparative data series - it would be the first time in recent market history that a major corrections final swoon was accompanied with a lower low in the NYSE - NHNL.

In tearing a page from the Keep It Simple Stupid (KISS) playbook, THE low for an equity correction was always accompanied by a higher low in the NYSE - NHNL. This point also dovetails neatly to my previous note that described THE low for a major correction was typically made with a diverging low in the VIX.

The most dangerous, although highly unlikely scenario for the bears, would be a market that bounced similar to the late 2007 tape to new highs, before promptly turning right back around and sliding lower for the next 18 months. I believe the most likely scenario would loosely follow the 2008 script - where the headline risks associated with the gauntlet of moving parts in Europe introduces another downside catalyst - sooner rather than later. To a certain degree, last weeks decline and reversal was out of step with where the Europeans are within the crisis and their own set deadline. To expect that the market finale for the correction would end so discretely and without overlap seems naive at best and reminds me of when traders were celebrating the 20% rise in the SPX from the lows in December of 2008 - before the details of resolving our own banking crisis were enumerated by the Fed and Treasury.

In light of these observations, I am expecting the SPX to diverge in the next several weeks with the EKG of a Crash analog - as the market comes to terms with the continuing kinetics out of Europe and what that will mean towards price discovery.

As always - stay frosty.

2011 NYSE New Highs - New Lows & SPX
Larger Image

2008 NYSE New Highs - New Lows & SPX
Larger Image

2000-2003 NYSE New Higs - New Lows & SPX
Larger Image

2007/2008 NYSE New Highs - New Lows & SPX
Larger Image

1998 NYSE New Highs - New Lows & SPX
Larger Image

 

Back to homepage

Leave a comment

Leave a comment