Research Excerpts

Chart Of The Week: Frothy Market Breadth In NASDAQ 100

Posted on: Wednesday, March 20th, 2013

The following is one of the 10 charts and corresponding commentary/analysis/strategy from our Monday March 18th Keys To This Week report (access requires subscription, click here to view a sample report).

Keys To This Week, one of 8 different reports that we produce for subscribers throughout the month, is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, the US Dollar, and economically-influential commodity prices that are most likely to influence US financial market direction during the next one to several months.


Excerpt From: Keys To This Week
Asset Class: US Equities
Topic: Market Breadth
Date: March 18th, 2013

 

Chart 3

Market Breadth: NEAR TO INTERMEDIATE TERM BEARISH. Through Friday most measures of near term (monthly) market breadth are either at frothy extremes that have historically coincided with or led one to several month US stock market declines, or are showing a negative divergence which means that new index highs are being made on a decreasing number of rising constituent stocks.

The red highlights in Chart 3 above show that the 10-day moving average of new highs minus new lows in the NASDAQ 100 (blue line, lower panel) has reached an historic frothy extreme that has previously coincided with most every near term peak in NDX since 2011.

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