Technical Market Report For Saturday, May 8

Technical market report for Saturday, May 8, 2021

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

The Negatives

Although new highs on the Nasdaq have remained at comfortably high levels, they have failed to confirm the new price records.

The first chart covers the past six 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 first trading day of each month. The OTC NH has failed to confirm the rally of the past six weeks.

The next chart covers the past six months, showing the OTC in blue and a 10% trend (19-day EMA) of Nasdaq new lows (OTC NL) in brown. The OTC NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good). The OTC NL fell to an uncomfortably high level of 72 last week. 

The next chart is similar to the previous one, except it shows the SPX in red and the NY NL in blue. The information has been calculated with NYSE data. The level of NY NL is not uncomfortably high, but it moved downward while the SPX was moving to a new high last week.

The Positives

Last week's new blue chip records were confirmed by the levels of the new highs on the NYSE. The next chart is similar to the first one, except it shows the SPX in red and the NY NH in green. The information has been calculated with NYSE data. The NY NH confirmed the new SPX record, thus implying higher prices ahead.

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 held above the 90% level, which is very strong. 

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