Shamsaee,
>>>> Can some one explain the fact that the nas looks very healthy with up volume/down volume higher and new lows and new highs/new lows looking better every day.I remember a few days ago the ratio was 4 to 10 now its almost even. <<<<
Firstly, lets talk about todays specific. The ADVANCE/DECLINE and the NEW HIGHs/LOWs are in favor of the DECLINES/NEW LOWs by a slight amount. The up volume is almost double the down volume. That implies that specificly todays rally in the NAZ is fairly narrow. Narrow rallys are not really a sign of strength. Right now theres about 1.2 billion shares traded on the NAZ which is not really strong volume, which again doesnt give good support to a rally.
Now, lets discuss the improvement in the new highs/lows. You have a valid point that it has been improving, but improving enough to support a trading range trend or a firm uptrend. I dont recall what the NAZ NEW HIGHs were during the firm bull trend, but lets talk about the NYSE. When the NYSE was firmly bullish the NEW highs were consistently in the 200-400 region every day and had spikes as high as 700 on a single day. Thats when the DOW was firmly bullish. I believe that the NAZ NEW HIGHS were also up in that region. Recently the NYSE NEW HIGHS improved to the 100+ region, which is still not the 200-400 region. So my question is, and I dont have know for sure, has the NYSE NEW HIGHS improved enough to support a resumption of a firm UPTREND or is it just enough to support a TRADING RANGE TREND. As you know, my position is still a TRADING RANGE TREND in the region of 1550-1340 in the SPX.
Another thing is that back in late 1997/early 1998 I kept a daily record of the NEW HIGHS/LOWs for both the NYSE and NAZ and I applied a 5 day, 8 day, 13 day, and 21 day moving average of the new highs/lows, with the cross-over function. In MAR of 1998 there was a significant crossover to the downside of the above moving averages and some may remember that I starting expressing caution in the market at that time. However the market didnt top out until JULY 20, so that method of use on the NEW HIGHS/LOWs lead the market by over 3 months. So what I concluded from that was that although it did predict the selloff, it led the market to much to be a good timing device.
If the new highs/lows continue to improve I would agree that it is an early warning, but 1-2 week improvement is not alot of data, but getting there. And if it does improve, does it improve to the level to support a new bull run or only enough to support a trading range trend. |
