James,
>>>> The tone of the market is improving...
finance.yahoo.com
Note that Advancers are greater than Decliners and New Highs are greater than New Lows... Also, New Lows are about half of what they were at this time yesterday... We could be building up steam for a nice rally going into next week... <<<<<
I have also noticed the improvement in the NEW HIGHs/LOWs which is a positive for the market if it continues to improve. Ive gone back a few years on the NEW HIGHs/LOWs charts and have noticed pockets of improvement just before another decline. So is this recent period of improvement in the NEW HIGHs/LOWs just a pocket before another decline or is it for real.
I noticed something on FRIDAY which may be giving a hint the improvement in the NEW HIGHs/LOWs may be beginning to stall. On Thursday, the market was down most of the day and down significantly and the NEW LOWs did not overwhelm the NEW HIGHs as it did previously, keeping in mind that the NEW LOWs got into the 300+ area recently. That was a sign of improvement. However, on FRIDAY, with the market up most of the day and closing strong, the NEW LOWs/NEW HIGHs did not improve that much and was basicly the same as THUR. I need more confirmation, but the action on FRIDAY may be a hint that the improvement in the NEW HIGHs/LOWs may be improving.
In the past I mentioned that if there are new highs in the indices, it would be narrow and only be for a few indices not the whole market.
Since April the overall market really has not gone anywhere, but the SOX did hit significantly NEW HIGHs, while the rest of the market stayed in a range. Just another example of sector rotation which benefit only a few stocks. I still see this continuing, so if we see the DOW or some other sector set a new high, lets also see how the rest of the market is doing also.
The recent rebound in the DOW has been strong and the DOW is not far from retesting the highs. OK, but how are the other indices doing. Lets take a look at broader indices/sectors like the RUT,MDY,VGY,SPX. Those indices have also improve but only improve to the 50% range or less.
I just dont see technical evidence that we are heading to new highs right now for the whole market, and Im not talking about 1 or a few sectors.
We also need to remember that most of the indices just had a cycle where they produce LOWER LOWS and LOWER HIGHS. Im not sure I would want to ignore such too quickly.
Im also not one for strong predictions as in a BK, but I do feel that this is the time to have firm caution
seeya
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