Monday, August 25, 2014

Lowest Non Holiday NYSE Volume in a Couple Years

Interestingly today, the S&P 500 made a new all time high, hit the round number mark of 2000, and SPY opened with a gap up, and yet the NYSE volume dropped to the lowest level in over 2 years - excluding holiday trade.  I'm sure that arguments can be made regarding what this means, but my opinion is that if buy programs are not kicking in here, then I kind of doubt that the market will hold up well at this level.

Click on Chart to Enlarge

This chart shows a 3 year history of daily New Highs - New Lows on the NYSE.  Of note here is that while we are at 2000 on the S&P 500 and new all time highs, the NH-NL is at a comparatively paltry 316.  The closest precedent I see on this chart is the first couple days of May 2012, in which the S&P 500 did NOT make a new high, but some indexes did, and the NH-NL topped right about where it is now and then stocks corrected about 10% the next 5 weeks.

So possibly we see some continued advance and the Dow makes a new all time high, and the Russell 2000 pushes higher and we see this number expands.  But currently, the reality is that stock averages are making higher highs with fewer stocks actually making higher highs.  This is classic topping action as far as I can tell.  Breadth deteriorates over a drawn out time frame, and finally the rally fizzles out.  Time will tell here, but I would look at this current market point as a significant resistance level that currently does not appear will be surmounted in the short term.

Today also formed a narrow range doji candlestick on SPY.  This could be an abandoned baby candlestick if stocks gap down tomorrow and move further to the downside.  For now, there is a quality shorting set-up on the hourly time frame from my perspective.

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