Since early April the Nasdaq has been a leading index. Net new highs have failed to expand, though. According to my data provider, they peaked at 64 on May 2nd. The last few days there have been significantly more new lows than new highs. If you take the net difference and divide it by the number of stocks trading on the Nasdaq your result for Tuesday and Wednesday was less than -1%. (Wednesday: 53 new highs – 93 new lows = -40 net / 3030 issues = -1.32%). Coming off a 4-month (80 day) high this is an unusual occurrence.
I looked back to 1994 (as far back as I had the data) to see if I could find other times where the Net New High Percentage ratio closed below -1% twice within 3 days of an 80-day high. I found three other dates 7/23/98, 7/20/07, and 11/02/07. Charts below (click to enlarge):
Pretty ugly.
If I allow for two -1% Net New High Pct days within a week (rather than 3 days) of the top then 10/15/99 also shows up.
The bulls better hope this time is like 1999.
Good stuff, Rob.
ReplyDeleteHoping for another 1999? Hmmh, that sounds ominously like more of a matter of "How long before we are in really deep doo doo?"
Bearish, but open minded,
-Bill
Rob - I get the idea, I just don't see what it shows on those charts. It doesn't look to me like that's an 80 day high in the net new highs. Can you clarify?
ReplyDeleteGo Celts!
Damian
Damian, I believe it's the 80 day high of the Nasdaq index. Jimmy
ReplyDeleteJimmy's right. Nasdaq Composite makes 80 day high and then new lows swamp new highs immediately upon pullback.
ReplyDeleteSorry for the confusion.
Rob
With the small sample and variable results I'd say there wasn't any signal there...
ReplyDelete