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New highs soaring, now lows just a slight rise from very low level.
MCO
Despite lengthy stretch of red in October and November, only a pullback to 20MA and 1 day below that (NovP near exact tag). December reds just pullbacks to rising 10MA.
Very healthy market and I think we will see YR1s in Q1.
When the market reached a similar levels of new lows in August, indexes were already dropping and VIX already spiking. What's going on this time? Also note early November 2016.
NHNL D
New highs deteriorating somewhat after the peak value on 10/13, along with some increase in new lows. (Weekly version not shown still strongly in favor of stocks.)
On MCO it 'seems' like we should have had more of a drop before racing back to new high!
Daily new highs & new lows a bit weaker compared to last week. This is reflected by QQQ and IWM.
Stll some chance of SPX SXY YR2 trading high if MCO stays red. The delayed reaction may have been slugglishness 10/6-17.
Very slight increase in new lows but one cannot argue with the strength of new highs.
Slight turn up on new lows but new highs accelerating up.
If 10MA of new lows (thick red) crosses above the 20MA (thin red)...
And the 10MA of new highs (thick blue) falls under the 20MA (thin blue)...
Then we have a reason for concern but until then, long and strong is correct approach.
Weekly chart
10 week average of NYSE new highs in blue, new lows in red. Other new lows of recent magnitude involved more than -2.9% drop.
Daily
Places where new highs (blue) crosses back above new lows (red) have been good places to recommit to bullish view. Also, fewer new 52 week lows on NYSE than at any point since late February. Until we see that line increasing, i view fewer new lows as bullish for stocks.
Weekly new high 10 moving average in blue and new low 10 moving average in red - also with red horizontal line at current peak in new lows.
New low spikes this decade happened in 9/2011, 6/2012, 12/2012, 12/2014, 9/2015 and 1/2016. Though the recent spike matched 6/2012, in this instance SPX 2.95% but June 2012 -10.5%. RUT / IWM suffered more at about -7% but this was the worst of the USA main indexes by far.
And here's the daily view with new high average exceeding the new low average on 8/31. Recent similar incidences have been good times to commit back to the bullish side.
Daily version of this pointing bullish.
NHNL D
But case to be made for weekly caution with fewer new highs in June 2017 compared to January 2017 and August 2016, and new lows increasing from February 2017.
Last week's blog post: "New lows have been rising since since late July all the way to 8/21. The cross of new lows exceeding new highs was about 8/15-16. The market is not "in the clear" until new highs exceed new lows. Should that happen, point in bulls favor."
And that is how it played out on 8/31, with 10MA of new highs jumping to 63 with new lows falling to 49. Note these other crosses since 2016 have been excellent places to return to bullish mode - 3/1/2016 and 11/10/2017.
