The good news is:
The secondaries outperformed the blue chips again last week.
The Negatives
The market is overbought. The Dow Jones Industrial Average (DJIA) has been up for 7 consecutive days and the Russell 2000 (R2K) has been up for 6 consecutive days. Seasonality for the coming week has been, on average, negative.
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 lows (OTC NL) in brown. Dashed vertical lines have been drawn on the 1st trading day of each month. OTC NL has been plotted on an inverted Y axis so fewer new lows move the indicator upward (up is good).
I am calling this a negative because OTC NL moved slowly upward while the index was moving sharply upward.
The next chart is similar to the one above one except it shows the S&P 500 (SPX) in red and NY NH, in green, has been calculated with NYSE data.
NY NL also moved upward too slowly.
When the market is coming off a bottom or significant low, new lows disappear and the new low indicators move sharply upward. That is not what we saw last week.
The Positives
Last week advancing issues outnumbered declining issues and new highs outnumbered new lows every day on both the NYSE and Nasdaq.
The next chart covers the past 6 months showing the OTC in blue and a 10% trend of Nasdaq new highs (OTC NH) in green.
OTC NH came to life last week.
The next chart is similar to the one above one except it shows the SPX in red and NY NH, in green, has been calculated with NYSE data.
Ditto for NY NH.
The next chart covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY 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.
NY HL Ratio moved sharply upward finishing the week at a comfortable 74%.
The next chart is similar to the one above except it shows the OTC in blue and OTC HL Ratio, in red, has been calculated with Nasdaq data.
