Technical Market Report For Saturday, March 27

Technical market report for Saturday, March 27

The good news is that the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) both closed at all-time highs last Friday. 

The Negatives

The blue chips led the market upward last week. The secondaries lagged and the highs were unconfirmed by the breadth.

The first chart covers the past six months, showing the S&P 500 (SPX) in red and a 10% trend (19-day EMA) of NYSE new lows (NY NL) in blue. The NY NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good). Dashed vertical lines have been drawn on the first trading day of each month.

This one went from bad to worse. On the positive side, new lows on the NYSE dropped from 207 on Thursday to 24 on Friday.

The next chart is similar to the first one, except it shows the NASDAQ composite (OTC) in blue and the OTC NL in brown. The information has been calculated with NASDAQ data.

This chart is similar to the previous one, and new lows on the NASDAQ declined from 376 on Thursday to 88 on Friday. The decline to 88 is comforting, yet 88 is still a threatening number.

The next chart covers the past six months, showing the SPX in red and a 10% trend (19-day EMA) of NYSE new highs (NY NH) in green. This is a significant non-confirmation of the new DJIA and SPX highs.

The next chart is similar to the first one, except it shows the OTC in blue and the OTC NH in green. The information has been calculated with NASDAQ data. The OTC NH did not confirm the rally.

The Positives

New index highs, along with a sharp decline in the number of new lows, is a positive.

The next chart covers the past six months, showing the SPX in red, and a 40% trend (four-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.

The NY HL Ratio dropped below the neutral line and then recovered to a modestly positive 60%.

The next chart is similar to the one above, except it shows the OTC in blue and the OTC HL Ratio in red. The information has been calculated with NASDAQ data. Although the OTC HL Ratio is negative at 39%, I expect it to recover quickly.

Seasonality

Next week includes the last three trading days of March and the first trading day of April, all during the first year of the Presidential Cycle. The market will be closed in observance of Good Friday. The tables below show the daily change on a percentage basis for that period. 

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Comments

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William K. 3 weeks ago Member's comment

Certainly an interesting approach, plotting new highs and new lows. It takes a bit of thinking to understand what they mean.

There is a flaw i looking at averages, which is that the giants and the small ones average is affected much more by one giant doing well than by 50 small ones NOT doing so very well.So the sunshine might be misleading.