NYHL NYSE New Highs-New Lows Weekly Chart

Keystone has highlighted over the last year how the stock market prints new highs but the NYHL moves lower (red line). Thus, as markets are running higher fewer and fewer stocks are making new highs while more are making new lows. In the robust stage of a rally, like back in 2012 the new highs will increase over time with the rising stock market. So the red line is a bearish indication for markets over the intermediate and longer term.

The green circles show important market bottoms over the last couple years where traders are throwing the baby out with the bath water and indiscriminate selling is taking place. The new lows increase and new highs decrease creating the negative NYHL (new highs minus new lows) and indicates that the market negativity is at fevers pitch. This is when the snap-back rally begins.

In October and December the market bottoms are easy calls with the NYHL. The current market action, however, is something different. Considering the five days of selling, the expectation would be that price would at least be under the zero line to indicate a bottom at hand but its not. This is very surprising and hints that further market negativity may be required to create further fear and panic and a wash-out move. The CPC has not spiked above 1.20 as yet which would indicate a level of fear and panic consistent with near-term bottoms. The VIX is elevated above 20 but did not take a wild spike higher that would also indicate fear and panic. Traders continue to believe in the Fed and other global central bankers and remain relaxed and complacent about the market selling. 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.