8 replies to this topic

[Dex]

"Today I want to share a chart with you. The New High – New Low Index shown below illustrates a very important point – how the signals from a technical indicator can change depending on the market environment. NH-NL, described in Trading for a Living, is my favorite leading indicator of the stock market. This is why all members of the Spike group receive nightly updates of NH-NL charts.

The chart below shows a strong uptrend, with New Highs consistently above New Lows. The yellow vertical arrows mark the spots where New Highs weakened and came near New Lows. All those occurrences marked buying opportunities. What about the arrow at the right edge of this chart?

The first three yellow lines mark pullbacks within a bull market, but now there is a new factor – a massive bearish divergence between the S&P500 and NH-NL. It puts the bull trend under the shadow of a doubt and indicates that this current weakness is more likely to be a sign of a serious weakness rather than a buying opportunity.

Of course, only the future will tell. No one possesses a crystal ball, not even – gasp! – me. This is why risk control and money management are so important, but we will discuss that in another letter."

http://us.f546.mail....?...ox&inline=1

[dcengr]

Like this?

http://stockcharts.com/c-sc/sc?s=$NYHL&p=D&yr=3&mn=0&dy=0&i=p18674852194&a=94893892&r=6885.png

[selecto]

Like this, too?

[Rogerdodger]

Mike Burk:

New lows usually begin to increase before tops.
From the beginning of the year through last Wednesday there has been a modest build up in the number of new lows, but, on Friday we had the fewest new lows since the day after Thanksgiving.
The increase in new lows that began the first of the year was arrested last week. The current value of the indicator is 27 any number of NASDAQ new lows greater than 27 turn the indicator downward again jeopardizing the rally.
Healthy bull markets are accompanied by expanding new highs.
...the indicator is substantially lower than it was last November.
Diminishing new highs during a rally indicate narrowing leadership, this is not good.

MarketGauge.com

Edited by Rogerdodger, 13 January 2007 - 10:24 PM.

[James Quillian]

I figure new highs seperate from new lows and only use the Russell 3000 components as a data base.
Once the ETFs, ADRs and other stuff is filtered out of the NYSE a more severe picture emerges.

[snorkels4]

I figure new highs seperate from new lows and only use the Russell 3000 components as a data base.
Once the ETFs, ADRs and other stuff is filtered out of the NYSE a more severe picture emerges.

how about a comp to 2000

[James Quillian]

I figure new highs seperate from new lows and only use the Russell 3000 components as a data base.
Once the ETFs, ADRs and other stuff is filtered out of the NYSE a more severe picture emerges.

how about a comp to 2000

O.K. here it is.

[snorkels4]

average absolute values in the 2000 runup were much lower divergence went on for a similar amount of time i know you see this and im more making a query here as divergences dont seem to matter and seems to be because absolute value is so much higher. amazing what money sloshing around the globe looking for a home can do thanks

Edited by snorkels4, 14 January 2007 - 12:20 AM.

[James Quillian]

average absolute values in the 2000 runup were much lower
divergence went on for a similar amount of time
i know you see this and im more making a query here as divergences dont seem to matter and seems to be because absolute value is so much higher. amazing what money sloshing around the globe looking for a home can do
thanks

I admire anyone who has a handle on the market these days.
IMO traditional analysis is not working real well right now.
I still put a lot of importance divergence indicators but not with the confidence I once did.
Chart analysis has turned into the art of dodging traps.
This chart of MOS shows an example of a completed H&S top pattern.