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November 22, 2005
T-day, breadth strong overall, NYSE Net New Highs lagging, steel making a comeback.
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I will be taking off Wed-Fri and this blog will continue on Monday.
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Good day! The major stock indices remain strong with the broader non-tech part of the market strongest yesterday. The NYSE Composite closed at a new all time high and this does not happen in secular bear markets. The index not only recovered the October decline, but broken out to new highs and this is bullish. I will be watching the late October trendline and early November low for signs of a reversal.
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It was not that strong of a day, but Net New Highs on the Nasdaq moved above +100 for the fourth time this month. The 10-day SMA remains above zero and there is no cause for concern as long as this key breadth indicator remains positive.
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Net New Highs on the NSYE also finished in positive territory, but continue to lag Net New Highs on the Nasdaq. The 10-day SMA remains below the August trendline and below zero. A move into positive territory would turn this indicator bullish and give me more confidence in the current rally.
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On the Nasdaq, the volume of advancing stocks continues to outpace the volume of declining stocks. This simple measure of demand continues to favor the bulls. Until there is a sharp move below zero (like October – red oval), thinking bear is premature and the rally rides.
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The NYSE Composite quietly moved to a new all time high yesterday. Secular bear markets do not occur when such broad indices are recording ALL TIME highs. This index has done more than just recover from the October decline. The volume of advancing stocks continues to outpace the volume of declining stocks. The declines in November have been shallow (green box). Until there is a sharp decline below –500 in AD Volume Net, this indicator is firmly bullish.
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Is steel back? Steel stocks have been strong lately and the Materials sector has been strong since mid October. In fact, this is one of the top performing sectors since 19-Oct. US Steel (X) has participated and advanced above 40 on big volume yesterday. The short-term trend is clearly up, but the stock is nearing resistance from the February trendline and August low (broken support).
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Posted by Arthur B. Hill at November 22, 2005 08:06 AM