Tuesday, August 12, 2014

NYHL NYSE New Highs-New Lows Daily Chart

The blue circles moving left to right over the last year all represent continuous new market highs in the SPX month after month. Note the slope of the NYAD numbers is falling as the broad indexes continue printing new highs. The underlying market breadth is weakening with less new highs printing and more new lows printing for individual stocks as the overall stock market prints new all-time highs. In a strong bull market the opposite should be occurring. If you look back at the NYHL chart for 2012-2013 you will see higher NYAD highs with higher highs in the broad market verifying the bullish rally. Currently, the stock market is running out of oomph.

The two prints that stand out are in June and July where markets make a strong comeback driven by more Fed and central bank stimulus, buybacks, M&A, tax inversions, REIT conversions and other financial engineering. Note, however, that even the rally orgy in June-July with equities printing new all-time highs, the NYAD did not print a higher high as compared to the October high. The NYAD  should have easily exceeded the 800 level in a strong market. Of greater interest is the last push higher in equities where the SPX prints the high print at 1991 with the NYAD only able to print 360-ish; no oomph whatsoever, which leads to the market smack down.

The purple line at zero shows how market bottoms have occurred each time the number of new lows exceed the number of new highs which helped create the Friday rally into the present. The NYAD hints at further market weakness moving through the short term and intermediate term time frames. The stock market upside is led by fewer and fewer stocks such as AAPL, NFLX, PCLN, and other high-flyers, which is very indicative of a significant market top forming or in place. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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