Technical Market Report For Saturday, May 15

The good news is:

  • The market appears to be recovering from its hiccup early last week. 

The Negatives

New highs are an indication of the breadth of a move and new highs did not respond well to the strong rally of Thursday and Friday.

The first chart covers the past 6 months showing the Nasdaq composite (OTC) in blue and a 10% trend (19 day EMA) of Nasdaq new highs (OTC NH) in green.  Dashed vertical lines have been drawn on the 1st trading day of each month. 

OTC NH has failed to confirm the rally of the past 6 weeks and deteriorated further as prices rose at the end of last week.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of NASDAQ new lows (OTC NL) in brown.  OTC NL has been plotted on an inverted Y axis so DECREASING numbers of new lows move the indicator upward (up is good).

OTC NL fell further to an uncomfortably high level of 105 last week. 

 

The next chart is similar to the previous one except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.

Not much of a recovery in NY NL and at 41 the level is getting uncomfortable.

 

The next chart covers the past 6 months showing the 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 horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral, level.

OTC HL Ratio fell below the neutral level, finishing the week at 44%.


The Positives

The blue chip record highs of a week ago were confirmed by a lot of 52 week highs on the NYSE.  That implies higher highs ahead for the blue chip indices.

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 with NYSE data.

NY HL Ratio held above the neutral level finishing the week at 64%. 

 

The next chart is similar to the first one except it shows the SPX in red and NY NH, in green, has been calculated with NYSE data.

It is a bit troubling that NY NH continued to fall while the SPX rose sharply at the end of last week; however, the level of the indicator at 274 is still at a comfortably high level.

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